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AHEAD OF THE STORM: DOLLAR GAINS STRENGTH, STOCKS LOSE GROUND ON US INFLATION



According to the latest data, economic growth in the United States for the fourth quarter of last year was revised slightly downwards, suggesting a possible weakening of economic momentum. This downturn could have long-term implications for overall economic stability and may influence policymakers' decisions regarding monetary policy.

During this period, Applied Materials, a leading supplier of equipment for semiconductor production, faced a decline in its stock value after receiving a subpoena from the Securities and Exchange Commission (SEC) of the USA. This highlights increased regulatory pressure on the technology sector, which could restrain investment potential and growth in this area.

Also noteworthy is the drop in shares of UnitedHealth, one of the largest providers of healthcare services in the U.S., following the announcement of an antitrust investigation. This event underscores growing concerns about market power concentration and its impact on consumers and pricing in key economic sectors.

Stock indices such as the Dow, S&P 500, and Nasdaq showed a decline, reflecting overall investor caution. This caution is intensified in anticipation of the release of key inflation data, which could significantly affect the future actions of the U.S. Federal Reserve System in regulating interest rates.

The Personal Consumption Expenditures (PCE) index, which is the preferred inflation indicator for the Federal Reserve, is expected to show an increase in prices, confirming the continuation of inflationary pressure in the economy. This, in turn, could lead to a reassessment of expectations regarding the pace and timing of changes in the Fed's key interest rate.

Stocks in the market have struggled to maintain an upward trend following a series of data publications, leading to a moderate decline after a prolonged period of growth based on optimism around the potential of artificial intelligence and outstanding quarterly performance by Nvidia. This period of growth was abruptly interrupted when data confirming the persistence of inflation began to emerge, causing investor concern and leading to a reassessment of their expectations regarding the future monetary policy of the Federal Reserve System.

Evidence of sustained inflation in recent reports on consumer and producer prices, along with statements from Federal Reserve officials, has led investors to contemplate the possibility of delaying the first rate cut to a later date, possibly until June instead of the previously expected March.

Keith Buchanan, a senior portfolio manager at GLOBALT Investments, expressed the opinion that the market may face a period of uncertainty as investors will need to closely monitor inflation trends and adjust to the Federal Reserve System's long-term policy and rhetoric. He emphasized that any signs of inflation resurgence would be met with particular caution by the market and could cause significant fluctuations in financial markets.

Against this backdrop, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite demonstrated a decline, reflecting the general sentiment of uncertainty among investors. These data indicate that despite confident growth in the previous quarter, the beginning of 2024 may be marked by a slowdown in economic activity.

In addition to PCE data, this week is also expected to see other important economic reports, including weekly data on unemployment claims and manufacturing activity indices. These reports will provide a more complete picture of the economy's state and help assess further interest rate dynamics.

Statements by the president of the Federal Reserve Bank of Boston, Susan Collins, and the president of the Federal Reserve Bank of New York, John Williams, indicate the Federal Reserve System's cautious approach to changing monetary policy. Both leaders highlighted the importance of careful analysis of economic data before making decisions that could affect the goals of maximum employment and price stability.

In summary, global stocks have shown a decline, the yield on treasury bonds has fallen, and the dollar has strengthened its positions ahead of the publication of key inflation data, which could significantly impact the future policy of the Federal Reserve System. These events highlight the complexity of the economic landscape and the importance of careful monitoring by investors and policymakers to adapt to changing conditions.

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Forex Analysis & Reviews: Euro to suffer losses, dollar to edge higher





The European currency ended February with slight gains against the US dollar. However, this week, the EUR/USD pair risks resuming a decline ahead of the ECB's monetary policy meeting. If the regulator openly starts preparing the ground for rate cuts, the euro will face a steep sell-off.

ECB meeting: what to expect and prepare for? The European Central Bank will hold a monetary policy meeting on Thursday, March 7. The regulator is widely expected to keep interest rates unchanged, so all investors' focus will be on updated economic forecasts and any signals regarding the timing of rate cuts.

Market participants are leaning towards the ECB beginning to ease monetary conditions in the second half of the year, specifically at the June meeting. This scenario was reinforced by recent statements from European officials. Most members of the central bank called June the most likely month for rate cuts, emphasizing that premature actions could trigger another round of inflation. Meanwhile, price growth in the euro area continues to slow down steadily.

Data published last week showed that annual inflation fell to 2.6% in February from 2.8% a month earlier. Wage growth, one of the main indicators for the ECB in assessing inflation, also started to slow down but remained at a high level. This factor is currently preventing the regulator from a dovish policy shift, which, according to economists, poses a significant risk to the European currency. According to analyst Marios Hadjikyriakos, delaying interest rate cuts for too long could cause unnecessary damage to the European economy and lead to a situation where rates are eventually cut sharply and abruptly. This paints a grim picture for the euro, even if the ECB calls for patience this week. However, let's not jump ahead and focus on the near-term prospects of the European currency, which depend on the ECB's rhetoric at the upcoming meeting.


ING analyst Carsten Brzeski believes that the March meeting cannot be considered routine. As inflation in the EU continues to decline and the European economy remains weak, interest rate cuts will be the subject of heated debate. He is confident that persistent core inflation, uncertainty regarding wage dynamics, and enduring confidence in the EU economic recovery will not allow the regulator to cut rates in March. However, Brzeski believes that the central bank will definitely change its rhetoric, thus preparing the ground for rate cuts in June.



What should traders pay attention to during the ECB meeting? Here are three key points: Fresh inflation forecast Recall that in December, the ECB anticipated inflation to be at 2.7% this year and 2.1% next year. Any downward revision of the price growth forecast for 2024 and 2025 will likely open the door for earlier rate cuts in the EU, which could exert significant pressure on the euro.




A "balanced" risk assessment of the inflation outlook would be a strong signal in favor of rate cuts,. Brzeski noted. Changes to communication The ECB is not one of those regulators that quickly change its policy stance. It took several months to move from "we didn't even spell 'rate cuts" to "it is too early to discuss rate cuts." But if this time things are different, the euro is doomed to fall. If the bank says that members "had a first discussion on preconditions for rate cuts" or "we decided to start this discussion at the next meeting", this would mark a further shift in the direction of policy easing, ING believes.


Recession concerns Currently, the eurozone economy is not in a recession, but concerns about a slowdown in economic growth persist. Last year, Germany's economy, the largest in the EU, was particularly hard hit. The slowdown in global trade severely damaged its export-oriented business model. If the regulator voices concerns about a further downturn in the region at the March meeting, it could fuel speculation about a deeper ECB cut this year. Currently, the market expects the EU rates to be cut by 90 bps by the end of the year. A similar reduction is forecasted in the US as well. However, if the forecast regarding European rates is raised, EUR/USD is set for an inevitable fall. The American economy looks much more resilient at the moment, leading to speculation that the Fed could avoid a pivot this year. Why does the dollar have a better chance? With a strong US economy, the dollar is currently the most effective major currency this year.

Since the beginning of January,its exchange rate has added almost 3% against its main competitors. Gloomy economic prospects elsewhere also favor the dollar. The UK and Japan have entered a technical recession, the euro area is plagued by stagnation, and China is still grappling with a real estate market crisis. As we see, there is simply no alternative to the dollar at this stage, and this week's events may further underscore the dominant role of the American currency. On Wednesday and Thursday, all eyes will be on Fed Chair Jerome Powell's speech to Congress. The policymaker's assessments regarding further economic prospects in the US will be of crucial importance to the market. If the head of the Fed expresses optimism, it could further dampen expectations regarding the Fed's future dovish policy, thus supporting the dollar. On Friday, traders will shift their focus to the most important event of the week - the release of the latest US employment report.

Economists expect another round of robust job data, confirming that the American labor market remains in good shape. This could also strengthen investors' belief that the Fed will not rush to cut rates this year, giving a boost to the greenback across the board, including against the euro. Currently, investors have almost entirely ruled out a cut in the US in March and April. Most market participants expect the Fed to start cutting rates at the June meeting. However, some analysts believe that this may happen much later or not at all this year. For example, economist Torsten Slok holds such a view. In support of his theory, the expert presents 10 arguments: The American economy is not only maintaining its pace but also gaining new momentum, with improved growth forecasts. Indicators tracking inflation trends continue to rise. The core inflation rate closely monitored by Federal Reserve Chair Jerome Powell is also increasing. The US labor market remains resilient. Surveys among small business representatives indicate their plans to raise product prices. Research in the manufacturing sector shows an increase in paid prices, which is a harbinger of inflation. A similar trend can be seen in the service sector. Surveys among small businesses show that more and more employers plan to increase wages. Landlords are raising rates, and the cost of housing continues to rise. Financial conditions in the country continue to improve, creating a favorable economic environment. Therefore, if traders receive further evidence this week that the American economy is on the rise, it may cause investors to abandon forecasts of an imminent rate cut in the US. In such a scenario, the dollar has a chance to gain strong upside momentum against the euro.

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Forex Analysis & Reviews: Bitcoin vs. S&P 500: who will win in anticipation of economic data?





Wall Street securities posted declines at the end of trading on Monday, missing previous strong gains. Meanwhile, U.S. Treasury bond yields rose amid investor expectations of key employment data and Federal Reserve Chairman Jerome Powell's speech to Congress later this week.

Bitcoin has been at the center of the action, helped by its incredibly sharp rise and nearing its first record high since November 2021. At the same time as European stocks have failed to come close to their previous performance, the major US stock indices have also failed to break through their ceiling and push higher. The three major US indices fought desperately to rise over the latter part of the session, but failed to show positive momentum in the final hour.

The S&P 500 index showed a moderate decline, while the Nasdaq and Dow indices registered more pronounced declines. Continued gains in shares of chip makers such as Nvidia (NVDA.O) helped the S&P 500 Index set new intraday trading records during the session as investors continued to bet on demand for artificial intelligence (AI)-enabled products, although they were generally cautious ahead of economic data. The S&P 500 Communication Services Index (.SPLRCS) was the underperforming sector on the list, down 1.5%, while the Defense Index (.SPLRCU), which added 1.6%, posted the largest positive gain of the day. In contrast, Apple (AAPL.O) was negative, down 2.5% after a $2 billion EU antitrust fine barred Spotify (SPOT.N) and other music streaming services from informing users about payment options outside its App Store.

Based on the words of Scott Wren, senior global market strategist at Wells Fargo Investment Institute, investors were on the lookout for information on the health of the U.S. economy from key monthly data such as services sector data due out on Tuesday and non-farm payrolls data due out on Friday.

The Nasdaq started the month by incredibly breaking its own record on Friday during the trading day, while also ending trading at its highest level in two consecutive days as the artificial intelligence-driven technology rally continues to draw attention on Wall Street. Shares of artificial intelligence server maker Super Micro Computer (SMCI.O) were up 18.6%, and shares of footwear maker Deckers Outdoor (DECK.N) were up 2.6% ahead of its inclusion in the S&P 500 index. Securities of retailer Macy's posted an excellent 13.5% gain as real estate investment holdings Arkhouse Management and Brigade Capital Management raised their offer to buy the supermarket chain.


Investors are wary of Powell's upcoming two-day congressional testimony on Wednesday and Thursday, the European Central Bank's policy decision and the Labor Department's important February employment report, which will be released early Friday morning. On average, analysts believe the U.S. economy added 200,000 jobs in February and the unemployment rate remained at 3.7%. The Dow Jones Industrial Average (.DJI) fell 97.55 points, or 0.25%, to 38,989.83, the S&P 500 Index (.SPX) lost 6.13 points, or 0.12%, to 5,130.95, and the Nasdaq Composite (.IXIC) fell 67.43 points, or 0.41%, to 16,207.51. European stocks closed just below an all-time high as investors digested recent gains and waited in anticipation for the European Central Bank's monetary policy meeting on Thursday. The pan-European STOXX 600 index (.STOXX) lost 0.03%, while the MSCI World Stock Index (.MIWD00000PUS) lost 0.01%.

Emerging-market stocks rose 0.51%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 0.57% higher and Japan's Nikkei (.N225) rose 0.50%. Bitcoin rose to a more than two-year peak. The cryptocurrency was last up 8.1% to $67,655, approaching the intraday record reached in November 2021. The dollar was little changed against a basket of global currencies.

The dollar index (.DXY) fell 0.03%, while the euro rose 0.16% to $1.0854. The Japanese yen weakened 0.27% against the U.S. dollar to 150.53 per dollar, while the pound sterling last traded at $1.2689, up 0.31% for the day. U.S. Treasury bond yields rose. The benchmark 10-year bond was last down 9/32 to 4.217% from 4.182% late Friday night. The 30-year bond was last down 14/32 at 4.3522% from 4.327% late Friday night. Oil prices reversed earlier gains as demand concerns offset a widely expected OPEC+ decision to extend production cuts. U.S. crude oil fell 1.54% to settle at $78.74 a barrel, while Brent settled at $82.80, down 0.9% for the day. Gold jumped as market participants bolstered their bets that the Federal Reserve will start cutting interest rates in June. Spot gold added 1.6 percent to $2116.77 an ounce.

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Forex Analysis & Reviews: Wall Street comes alive: Powell talks about lowering rates





On Wednesday, the leading indexes on Wall Street ended trading in the plus side, motivated by economic indicators and statements by Federal Reserve (Fed) Chairman Jerome Powell, which confirmed speculation about a possible lowering of the federal benchmark interest rate this year. During Wednesday's speech, Powell expressed his view on the Fed's upcoming rate cut, emphasizing that the U.S. economy remains stable and a recession seems unlikely. However, he refrained from making specific promises about the timing of monetary easing, citing a lack of confidence in inflation dynamics.

In preliminary comments announced ahead of his speech to the U.S. Congress, Powell said inflation has "come down significantly" since hitting a 40-year peak in 2022. However, he said, additional confidence in a further decline in inflation is needed to begin the process of lowering interest rates. In addition to Powell's remarks, Mark Luschini, who is a senior investment strategist at Philadelphia-based Janney Montgomery Scott, emphasized that Wednesday's economic reports further bolstered expectations for lower interest rates and also boosted confidence in the state of the labor market. Fresh statistics indicated that the U.S. private sector job gains in February were slightly lower than expected. Job Openings and Labor Turnover Survey (JOLTS) data for January showed a slight decline in the number of job openings and a decrease in the pace of hiring, indicating a gradual improvement in the labor market. The upcoming nonfarm payrolls report for February, due on Friday, is expected to shed light on the current state of the labor market and the potential impact on economic policy. The Dow Jones Industrial Average (.DJI) index registered an increase of 75.86 points or 0.20% to close at 38,661.05. The Standard & Poor's 500 Index (.SPX) gained 26.11 points or 0.51% to close at 5,104.76, while the Nasdaq Composite (.IXIC) index moved up 91.96 points or 0.58% to close at 16,031.54. On the previous trading day, Tuesday, indexes on Wall Street experienced a drop of more than 1% due to a decline in the value of large-capitalized stocks and in anticipation of Powell's remarks, which were eagerly awaited by investors. On Wednesday, nine of the eleven key S&P 500 industry sectors ended the day in the green. Leading the way were the utilities sector (.SPLRCU), whose shares jumped nearly 1%, and the information technology sector (.SPLRCT), up 0.9%.

The Durable Goods sector (.SPLRCD) was the least dynamic, declining by 0.4%. Chip makers stood out among the rest, rebounding from the previous day's decline: the Philadelphia Semiconductor Index (.SOX) rose 2.4%, hitting an all-time closing high for the fourth time in the past five trading sessions. Tesla (TSLA.O) was among the companies pressuring the consumer staples sector, with shares falling 2.3% and notable declines for the third straight session. An analyst at Morgan Stanley, whose opinion the market is paying close attention to, adjusted downward the stock's target price, pointing to continued waning interest in electric vehicles in leading markets, including China, even as prices have fallen markedly. Additionally, the Baird specialist expressed concerns about Tesla's first-quarter earnings, suggesting that delivery volume forecasts may still need to be adjusted downward. Shares of Chinese company JD.com, which is traded in the U.S. market, posted a significant rise of 16.2% after the e-commerce company announced quarterly revenue that exceeded analysts' expectations and an expansion of its share repurchase program. Shares of cryptocurrency-related companies also saw a rebound. Specifically, shares of Coinbase Global (COIN.O) were up 10% and MicroStrategy (MSTR.O) shares were up 18.6%. Shares of CrowdStrike Holdings (CRWD.O) jumped 10.8% as the company predicted full-year results that beat Wall Street analysts' forecasts. That was driven by increased cybersecurity spending by companies in response to growing threats on the Internet. At the same time, shares of their competitor, Palo Alto Networks (PANW.O), showed a decline of 4%.

The European STOXX 600 Index (.STOXX) was up 0.39%, while the MSCI Global Equity Index (.MIWD00000PUS) was up 0.59%. Emerging market equities also performed positively, rising 0.67%. MSCI's broad index of Asia-Pacific shares excluding Japan (.MIAPJ0000PUS) finished 0.78% higher. While Japan's Nikkei index (.N225) declined slightly, losing 0.02%. Bitcoin, after hitting record highs on Tuesday but subsequently pulling back, rallied again. At the last mark, the cryptocurrency was up 5.6%, reaching a value of $66,884. The U.S. dollar showed a decline compared to major world currencies. The dollar index (.DXY) lost 0.4%, while the euro added 0.38% to reach $1.0896. The U.S. dollar showed a decline against major world currencies. The dollar index (.DXY) lost 0.4%, while the euro added 0.38% to settle at $1.0896. The Japanese yen strengthened 0.45% against the U.S. dollar, settling at 149.39 per dollar. The British pound sterling was last seen at $1.2735, reflecting an increase of 0.25% on the day. The yield on 10-year U.S. Treasuries fell to a one-month low. The price of benchmark 10-year government bonds last rose 8/32, pushing the yield down to 4.1078% from the 4.137% recorded at the end of the day on Tuesday. The price of the benchmark 30-year government bond also increased, most recently by 18/32, bringing its yield down to 4.2406% from 4.274% recorded at the end of the previous day. Oil prices experienced an uptrend after U.S. oil inventory data showed a smaller-than-expected increase and in light of Powell's promise of lower interest rates. US West Texas Intermediate (WTI) crude oil rose 1.25% to settle at $79.13 per barrel, while Brent rose to $82.96, marking a 1.12% increase for the day. Gold continued to set new records for the second consecutive day, driven by expectations of monetary policy easing in the US. The spot gold price rose 0.9% to $2146.29 per ounce.

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US election: Wall Street at a crossroads




The S&P 500 and Nasdaq indices ended the trading session in the negative on Friday, retreating from the record highs reached during the day. This decline occurred against the backdrop of a decline in the sector of chip manufacturers and mixed data on the labor market, reflecting the exceeding of expectations for the number of jobs created while the unemployment rate rose.

During the trading session, the S&P 500 and Nasdaq indices briefly hit all-time highs, but by evening their dynamics changed to decline. The Philadelphia Semiconductor Index (.SOX) experienced a noticeable drop, losing 4% by the close of the day after earlier reaching the day's high. Shares of Nvidia (NVDA.O), highly regarded in the market for its contributions to the development of chips for artificial intelligence, suffered a 5.6% loss, ending their six consecutive sessions of gains.

This was despite the fact that they were up more than 5% in early trading. Broadcom (AVGO.O) shares in the chipmaker index also experienced a significant decline of 7%, driven by low investor expectations for the company's full-year outlook. In addition, Marvell Technology (MRVL.O) lost 11.4% in value after its first-quarter guidance fell short of market expectations due to weaker demand.

The stock posted gains at the open after data showed that U.S. job growth accelerated in February, with job openings in the nonfarm payroll sector rising by 275,000, exceeding analysts' forecasts for a gain of 200,000. At the same time, the January jobs data was downwardly revised. There is also an increase in the unemployment rate in February to 3.9% compared to the previous figure of 3.7%, which was maintained for three months. It should be noted that the rate of wage growth fell to 0.1% on a month-over-month basis. Brian Price, head of investment management at Commonwealth Financial Network, highlighted a trend toward more restrained spending on the part of consumers. This is reflected in shares of Costco Wholesale (COST.O), which posted a 7.6% decline as its quarterly sales volumes fell short of expectations due to moderate demand for higher-priced goods.

Nevertheless, Price emphasized that overall market sentiment remains optimistic with the anticipation of continued growth in the absence of any negative factors. He expressed his belief that the market is focused on the continuation of the favorable situation: inflation is expected to be maintained at a moderate level and the Federal Reserve is expected to initiate a policy of easing economic conditions. Upcoming data for February, which will be released next week and include information on the consumer price index (CPI) and retail sales, will provide additional information that could influence the assessment of the possibility of lowering interest rates.

In a speech on Thursday, Jerome Powell, chairman of the Federal Reserve, shared his view that the central bank is nearing the point where it is confident enough that inflation is falling, allowing it to begin the process of lowering interest rates. While investors continue to analyze possible profits and keep an eye on monetary policy, they are also beginning to consider a new factor that could significantly impact market conditions this year - the upcoming U.S. presidential election in 2024.


In an address to the nation on Thursday, US President Joe Biden put forward a proposal to raise corporate taxes, while his predecessor and potential Republican Party rival, Donald Trump, earlier in 2017 passed legislation aimed at cutting taxes for companies and the wealthy. Biden also expressed pride in U.S. economic achievements during his presidency. It is difficult to determine how politicians' proposals and initiatives ahead of the election will affect asset market prices. The winner of the election is likely to face the challenge of dealing with a divided Congress, which could significantly complicate any legislative initiatives. This uncertainty does not stop analysts from trying to assess how political changes may interact with other key elements influencing market dynamics.

Such factors include increasing interest in the business outlook for artificial intelligence and adjusting expectations about when the Federal Reserve might begin easing monetary policy. The S&P 500 Index (.SPX) has made notable gains, up 7.4% YTD and near all-time highs. Polls show a tight contest between the 81-year-old Biden and 77-year-old Trump. Despite the U.S. economy performing better than most advanced economies, the American people generally express higher confidence in Trump's economic competence in polls. As part of his speech on Thursday, Biden unveiled an initiative to impose a 21% minimum tax on the profits of corporations whose revenues exceed $1 billion, building on the provisions of the 2022 Clean Energy Act.

In addition, he expressed his intention to reinstate his "billionaires tax" initiative, which would impose a minimum tax of 25% on the income of U.S. citizens whose wealth exceeds $100 million. Analysts note that the Republicans' success in the elections is likely to entail an extension of the 2017 tax cuts, which could lead to higher inflation. At the same time, the Democrats' victory will result in an increase in tax rates for households and corporations with high income.

The Dow Jones Industrial Average (.DJI) index of industrial companies closed down 68.66 points, or 0.18%, stopping at 38,722.69. The S&P 500 Index (.SPX) fell 33.67 points, or 0.65%, to settle at 5,123.69, while the Nasdaq Composite (.IXIC) fell 188.26 points, or 1.16%, to 16,085.11. Among the 11 key sectors in the S&P 500, the technology sector (.SPLRCT) posted the largest decline, losing 1.8%. It was followed by the consumer staples sector (.SPLRCS) with a 0.8% drop, where Costco made a significant contribution. Over the past week, the S&P 500 Index declined 0.26%, the Nasdaq fell 1.17%, and the Dow Jones lost 0.93%. Meanwhile, real estate stocks (.SPLRCR) were the biggest gainers, rising 1.1%.

Behind them are shares of energy companies (.SPNY), which grew by 0.4%. Shares of Gap (GPS.N) jumped 8.2% as the retailer beat Wall Street analysts' forecasts for fourth-quarter results. That was due to increased demand for a revamped assortment of Old Navy and Gap-branded merchandise during the holiday season, as well as lower volumes of discounted merchandise.

On the New York Stock Exchange, the number of stocks that increased in value outnumbered those that declined by a ratio of 1.25 to 1, with 708 new highs versus 48 new lows. On the Nasdaq exchange, the number of stocks that increased totaled 2,086, while 2,192 declined, showing a predominance of declining over rising stocks with a ratio of about 1.05 to 1. The S&P 500 index marked 65 new 52-week highs and recorded no new lows, while the Nasdaq recorded 351 new highs and 83 new lows. Trading volume on U.S. exchanges reached 12.29 billion shares, which compares with an average of 12.08 billion over the past 20 sessions.

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Oracle Changes the Game: S&P 500 Hits Unprecedented High

On Tuesday, the American stock markets showed significant growth: the S&P 500 index set a historic record, thanks to the rise in Oracle's stock price, while the consumer price data failed to undermine investors' expectations regarding the possible lowering of interest rates in the coming months.

Oracle's (ORCL.N) shares rose by 11.7% and reached an all-time high the day after the company published positive quarterly results and announced an upcoming joint statement with Nvidia (NVDA.O), a leader in the production of chips for artificial intelligence. Nvidia's shares increased by 7.2%, and the semiconductor index (.SOX) rose by 2.1%, halting a two-day streak of declines.

The U.S. Department of Labor announced that the Consumer Price Index (CPI) jumped by 0.4% last month, following a 0.3% increase in January. Excluding volatile items such as food and energy resources, the core consumer prices also showed a growth of 0.4% in February, mirroring January's outcome.

Over the 12 months ending in February, the CPI rose by 3.2%, slightly exceeding the forecast of 3.1% after a 3.1% increase in January. On Tuesday, the global stock index was on track to recover after two days of declines, stretching along with the yield on government bonds.

This came following the publication of data confirming that inflation in the U.S. remained stable in February. These details hint at the possibility that the Federal Reserve might continue to keep interest rates at a heightened level for longer than previously anticipated.

Investors have embraced the idea that the key question is not when the Federal Reserve will start to cut rates, but how aggressive these cuts will be. The question of whether this will happen in May, as many initially hoped, or be delayed until September, is not considered decisive by experts. Oliver Pursche, Senior Vice President and Advisor at Wealthspire Advisors in Westport, Connecticut, expressed this viewpoint.

According to the CME FedWatch Tool, traders currently estimate a 70% chance of the first interest rate cut occurring in June, slightly less than the previous estimate of 71% before the inflation report was published. "An inflation rate exceeding expectations indicates consumer well-being and shows the economy's 'pricing power' that businesses are leveraging.

Analysis of other economic indicators suggests that this is not having a negative impact," noted Rob Haoworth, a senior investment strategist at a bank's asset management division in Seattle. The Dow Jones Industrial Average (.DJI) rose by 235.74 points, or 0.61%, reaching 39,005.4. The S&P 500 (.SPX) increased by 57.3 points, or 1.12%, to 5,175.24, while the Nasdaq Composite (.IXIC) grew by 246.36 points, or 1.54%, closing at 16,265.64.

The producer price index report is expected to be published at the end of this week. Boeing's (BA.N) shares fell by 4.3%. On Tuesday, Boeing informed its employees through an internal memo about the implementation of weekly compliance checks at each work site of the 737 production plant, as well as the introduction of additional equipment inspections with the aim of minimizing product quality issues.

The Federal Aviation Administration (FAA) of the U.S. imposed restrictions on Boeing's production following an incident where a panel peeled off in flight on a new Alaska Airlines 737 MAX 9 airplane on January 5th. U.S. airlines also expressed concerns that their strategies for expanding transport capacity might be jeopardized due to delays in the delivery of airplanes from Boeing.

Shares of Southwest Airlines (LUV.N) fell by 14.9%. Trading volume on U.S. exchanges reached 10.97 billion shares, compared with the usual average level of 12.07 billion over the last 20 sessions. On the New York Stock Exchange (NYSE), the number of advancing stocks exceeded the number of declining ones in a ratio of 1.28 to 1; on Nasdaq, the ratio was 1.20 to 1 in favor of declines. The S&P 500 index recorded 48 new 52-week highs and showed no new lows; the Nasdaq Composite index registered 59 new highs and 118 new lows.

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Forex Analysis & Reviews: The inflation effect: how news affects stocks, the dollar and bond yields



The Producer Price Index (PPI) for final demand increased by 0.6% last month, exceeding the growth forecast of 0.3% predicted by economists surveyed, after an unreviewed rise of 0.3% in January, according to the Labor Department. Data on consumer inflation at the beginning of this week also showed some resilience in inflation levels. Further reports revealed that retail sales in the United States bounced back last month, increasing by 0.6%, but fell short of the 0.8% estimate. Meanwhile, the number of initial weekly unemployment claims dropped to 209,000, below the forecast of 218,000.

The data indicated that producer prices in the U.S. in February rose more than expected, driven by increased costs of goods such as gasoline and food. Interest rate-sensitive sectors like utilities (.SPLRCU) and real estate (.SPLRCR) were among the weakest of the day: real estate fell by 1.6%, and utilities by 0.8%. Nvidia (NVDA.O) shares fell by 3.2%, and the semiconductor index (.SOX) declined by 1.8%. Over the week, the index dropped by 3.5% as investors took profits following a recent sharp increase.

Since the beginning of the year, the S&P 500 index has increased by about 8%. Shares of the small-cap Russell 2000 index (.RUT) fell by 2% for the day, lagging behind the overall market. Shares of Robinhood Markets (HOOD.O) rose by 5.2% after the trading app operator reported a 16% increase in custodial assets in February. The trading volume on U.S. exchanges amounted to 13.1 billion shares, compared to the average of 12.1 billion for the entire session over the last 20 trading days. Decliners outnumbered advancers on the NYSE by a ratio of 3.77 to 1; on the Nasdaq, the ratio favoring decliners was 3.08 to 1. The S&P 500 recorded 39 new 52-week highs and no new lows; the Nasdaq Composite reported 57 new highs and 186 new lows. The Dow Jones Industrial Average (.DJI) fell by 137.66 points, or 0.35%, to 38,905.66, the S&P 500 (.SPX) lost 14.83 points, or 0.29%, to 5,150.48, and the Nasdaq Composite (.IXIC) dropped 49.24 points, or 0.30%, to 16,128.53. Ahead of next week's Federal Reserve policy meeting, where a rate cut is nearly ruled out, the market reduced the chances of a cut at the June meeting, expecting a reduction of at least 25 basis points at a 59.9% likelihood, according to CME's FedWatch Tool, compared to 81.7% a week ago.

Bank of Japan officials will also meet next week. Officials, including Governor Kazuo Ueda, have attempted to temper expectations for an imminent departure from negative interest rates, which led to the yen's worst weekly performance in a month. The yield on 10-year bonds was expected to see the largest one-day rise since February 13th. The MSCI global stock index (.MIWD00000PUS) fell by 2.75 points, or 0.35%, to 772.53, while the STOXX 600 index (.STOXX) closed down 0.18% after reaching its third consecutive intraday record high. The overall European index, FTSEurofirst 300 (.FTEU3), lost 3.37 points, or 0.17%. The dollar index rose by 0.53% to 103.29, and the euro fell by 0.5% to $1.0891. Against the Japanese yen, the dollar strengthened by 0.32% to 148.22.

The yen briefly strengthened against the U.S. dollar after Jiji news agency reported that the Bank of Japan had begun taking steps to end its negative interest rate policy at the meeting on March 18-19. Investors are assessing the likelihood of a policy change this month, especially after news of significant wage increases at some of Japan's largest companies during this year's annual wage negotiations. As for commodities, U.S. oil rose by 1.93% to $81.26 a barrel, and Brent oil reached $85.42 a barrel, up 1.65% for the day, marking the highest settlement price since November 6th, following the latest International Energy Agency (IEA) report predicting a tighter oil market in 2024.

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Forex Analysis & Reviews: Wall Street's decline driven by tech sector and Fed rates



The global stock index also showed a decrease on Friday, setting a course for a weekly decline after seven consecutive weeks of gains, while the dollar strengthened, heading for its most significant weekly gain since mid-January as the latest US inflation data fueled new hopes for interest rate cuts.

Data released on Friday showed a slight increase in US import prices in February, as the rise in the cost of petroleum products was partially offset by modest growth in other areas, suggesting an improvement in the inflationary landscape. Stocks this week faced challenges after US consumer and producer price data indicated that inflation remains persistent, dampening expectations that the Federal Reserve would cut rates by its June meeting.

Market assessments of a Fed rate cut of at least 25 basis points in June stand at 59.2%, down from 59.5% in the previous session and 73.3% a week ago, according to CME's FedWatch Tool. The central bank is expected to maintain interest rates at its meeting next week, but investors will closely monitor the central bank's economic forecasts, including interest rate projections. On Wall Street, the Dow Jones Industrial Average (.DJI) fell by 190.89 points, or 0.49%, to 38,714.77, the S&P 500 (.SPX) lost 33.53 points, or 0.65%, to 5,116.95, and the Nasdaq Composite (.IXIC) dropped 155.35 points, or 0.96%, to 15,973.17.

Over the week, the S&P 500 lost 0.13%, the Dow dropped 0.02%, and the Nasdaq decreased by 0.73%. Additionally, a study by the University of Michigan showed its preliminary consumer sentiment and inflation expectations data barely changed in March, while a separate report indicated that US factory production in February increased more than expected. Adobe (ADBE.O) shares fell by 13.7% the day after the company forecasted second-quarter revenue below analysts' estimates, citing competition and weak demand for photos, illustrations, and videos integrated with artificial intelligence. Among other declining stocks, Ulta Beauty (ULTA.O) shares fell by 5.2% after its projected annual profit came in below Wall Street estimates, as rising supply chain costs and intensified promotional activities negatively impacted its profits. The S&P 500 technology index (.SPLRCT) dropped by 1.3% for the day, leading the downturn among sectors.

Shares of Microsoft (MSFT.O) fell by 2.1%, marking one of the index's most significant declines. The semiconductor index (.SOX) decreased by 0.5% on Friday, registering its most significant weekly percentage drop since the beginning of January. Announcements related to AI at Nvidia's (NVDA.O) GTC developers conference, scheduled for March 18-21, will be closely watched.

The Russell 2000 index of small-cap companies (.RUT) fell by 2.1% for the week. Friday's volume was the highest of the year on US exchanges, with 18.76 billion shares traded. The average full-session volume over the last 20 trading days was about 12.4 billion. Although Wall Street's AI-driven growth has stalled, the S&P 500 index has continued to rise by 7.3% since the beginning of the year. According to data released on Friday, US factory production in February grew more than expected, but the January figure was sharply revised downwards, as production continues to be constrained by higher interest rates. The dollar index gained 0.05% to 103.43, recovering some of the previous week's decline with a 0.71% increase, while the euro rose 0.06% to $1.0889 for the session. The sterling weakened by 0.13% to $1.273.

Against the Japanese yen, the dollar strengthened by 0.49% to 149.05, despite expectations that the Bank of Japan is expected to end its negative interest rate policy at its meeting next week.

The MSCI global stock index (.MIWD00000PUS) fell by 5.07 points, or 0.66%, to 767.58, heading for its third consecutive daily drop, the longest streak since the beginning of the year, and a 0.48% decrease for the week.

The STOXX 600 index (.STOXX) closed down by 0.32%, while the broader European index FTSEurofirst 300 (.FTEU3) fell by 7.42 points, or 0.37%. The yield on benchmark 10-year US Treasury bonds rose by 1 basis point to 4.308% after reaching 4.322%, the highest level since February 23.

The yield on 10-year bonds this week jumped by 22 b.p., the most significant increase since mid-October. The yield on 2-year Treasury bonds, which typically moves in step with interest rate expectations, rose by 3.9 basis points to 4.7297% and increased by 24.6 b.p. for the week, marking the biggest jump in two months. Oil prices fell a day after exceeding the $85 per barrel mark for the first time since November. Oil indices finished the week with a growth of more than 3%. U.S. crude oil decreased by 0.27% to $81.04 per barrel, and Brent crude fell by 0.09% to $85.34 per barrel.


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Forex Analysis & Reviews: AI Powers Wall Street Growth Despite Fed's Caution




At the beginning of the week, Wall Street's key indices saw growth, thanks to the influence of large-cap companies like Alphabet and Tesla, which contributed to strengthening the Nasdaq's technology sector.

The market is also anticipating the upcoming meeting of the Federal Reserve System of the U.S., drawing investor attention. A significant boost to the market came from the announcement that Apple is discussing with Google the incorporation of the Gemini AI engine into the iPhone, which had a substantial impact on Alphabet's shares, the parent company of Google.

This innovation supported the communications services sector, which grew by nearly 3%, becoming the leader among the 11 key sectors of the S&P 500 and reaching its highest level since September 2021. Tesla (TSLA.O) shares demonstrated significant growth, increasing by 6.3%, and leading the S&P 500 companies in growth pace. This increase followed the company's announcement of imminent price hikes for the Model Y electric vehicles in certain European regions.

Nvidia (NVDA.O) shares also saw an increase, this time by 0.7%, but their closing was notably lower than the day's high. This event coincided with the start of the company's annual artificial intelligence developers conference, where the community anticipates new chip announcements from CEO Jensen Huang. Lindsey Bell, a leading strategist at 248 Ventures in Charlotte, North Carolina, highlights the growing dilemma for investors torn between optimism about AI applications in the tech sector and concerns over the upcoming Federal Reserve policy update.

"The market is eager to continue trading activity, yet the focus is on the Federal Reserve's actions this week," notes Bell, emphasizing the tension among investors ahead of crucial decisions. The Dow Jones Industrial Average gained 75.66 points (0.20%), closing at 38,790.43, while the S&P 500 increased by 32.33 points (0.63%), reaching 5,149.42.

In turn, the Nasdaq Composite added 130.27 points (0.82%), closing at 16,103.45. This marked the end of a three-day losing streak for Nasdaq. The Philadelphia Semiconductor Index gave up its preliminary gains and ended the day almost unchanged, while the S&P 500 technology sector grew by 0.5%. Among the 11 key S&P sectors, the most vulnerable to declines were real estate, sensitive to interest rate changes, and the healthcare sector, where the decrease was 0.02%. Higher-than-expected inflation figures led market participants to reassess expectations regarding how soon and aggressively the central bank will cut interest rates this year.

The change in perception was reflected in the decreased probability of rate cuts in June from the previous 71% to 51% in the short term, as indicated by CME FedWatch data. The speculation that the Federal Reserve might adopt a tough stance in its upcoming meeting poses risks for equity capital. "Today's growth gives investors a chance to lock in profits before the Fed potentially expresses a stance that is more likely to disappoint the market than provide confidence after recent gains," noted Samir Samana, a senior global market strategist at Wells Fargo Investment Institute in Charlotte.

In its latest statement on Monday, Goldman Sachs adjusted its forecasts, now expecting three interest rate cuts in 2024 instead of the previously predicted four, after actual inflation data showed higher than expected figures. "Given that market indicators are near recent highs, it's hard to imagine what could act as a catalyst for further growth. At the same time, it's not too hard to envision scenarios that could lead to investor disappointment," Samana points out, focusing on the actions of the Federal Reserve and the high valuations of technology companies' stocks. Nasdaq (NDAQ.O), the exchange trading shares of leading American technology giants, reported the resolution of a technical malfunction that disrupted trading operations two hours before opening on Monday, emphasizing that all systems are now functioning normally again. The company did not provide details regarding the severity of the issue, which marked the second technical glitch in recent months.

The official website statement mentioned that the incident was related to the order matching mechanism, i.e., the software systems processing buy and sell orders. Last year, its competitor, the New York Stock Exchange (NYSE), also experienced a technical malfunction, preventing auctions for a significant number of stocks from starting at the usual time. This led to extensive trading delays, confusion regarding the accuracy of stock order executions, and the temporary suspension of trading for more than 250 securities. Xpeng shares, traded on the American market, increased by 1.9% thanks to the company's ambitious plans to offer a more affordable range of electric vehicles amidst fierce competition in pricing. Boeing (BA.N) shares experienced a decline of 1.5% after media reports emerged that the company was summoned to federal court in Seattle. The summons was related to an incident on January 5, when an explosion of a door plug occurred during a flight operated by Alaska Airlines (ALK.N) involving a Boeing aircraft. Super Micro Computer (SMCI.O), a company that joined the S&P 500 index at the beginning of the week, lost its previous gains and ended the day down by 6.4%, marking the most significant percentage loss among the companies of the base index for the day.

Nevertheless, shares of companies that have recently shown sharp growth due to bets on their potential benefit from the development of artificial intelligence continue to remain positive since the beginning of the year, showing an increase of more than 252%. At the New York Stock Exchange, the day ended with 224 new highs and 58 new lows, while the number of stocks that rose exceeded the number that fell by a ratio of 1.17 to 1. On the Nasdaq exchange, the number of stocks that closed in the plus was 1905 versus 2400 that ended the day in decline, reflecting a predominance of the latter by approximately a ratio of 1.26 to 1.

The S&P 500 index recorded 41 new highs for 52 weeks and just one new low, while Nasdaq registered 102 new highs and 131 new lows. The trading volume on American exchanges reached 11.16 billion shares, compared with an average of 12.41 billion over the last 20 trading sessions.

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Forex Analysis & Reviews: The Federal Reserve navigates interest rates: stocks are up, the dollar is on the decline




Global market indices rose, and the dollar halted its upward trajectory following the Federal Reserve's announcement of plans for three significant rate cuts this year, despite expectations of a slower decrease in inflation.

Jerome Powell, the Federal Reserve Chair, noted that despite recent high inflation figures, the main trend of easing price pressure remains unchanged. However, he emphasized that fresh economic data did not add confidence in conquering inflation. Shareholders positively received the Federal Reserve's decision to stay the course on planned interest rate cuts.

The global MSCI stock index reached a historic high, rising by 0.61%, thanks to the steady growth of stocks on Wall Street following the Fed's announcement. The Dow Jones Industrial Average increased by 1.03%, the broad-market S&P 500 index rose by 0.89%, and the Nasdaq Composite Index showed a growth of 1.25%. Irene Tunkel, a leading strategist for U.S. stocks at BCA Research based in Florida, noted, "The market feels relieved, seeing that the Fed still plans three rate cuts this year."

Expectations for rate cuts led to a decrease in the yield of government bonds. The yield on two-year Treasury notes decreased by 7.9 basis points to 4.6129%, while the yield on ten-year bonds fell by 1.5 basis points, reaching 4.281%. "It is particularly noteworthy that the Federal Reserve has significantly revised its GDP forecasts upwards not only for 2024, which was expected in light of the latest data, but also for 2025 and 2026," comments Ellen Heizen, the chief market strategist at F.L. Putnam Investment Management, located in Massachusetts. Following the Federal Reserve's meeting, the dollar lost ground.

The dollar index decreased by 0.433%, which contributed to a partial recovery of the Japanese yen. Its rate fell by 0.30% against the dollar, reaching 151.29 per dollar compared to the four-month low of 151.82, recorded earlier that same day. Most sectors in the S&P 500 index showed growth, with nine out of the eleven main industries demonstrating an increase in stock value.

Particularly, consumer sector stocks stood out, where growth was 1.5%, taking the lead in gains. The healthcare sector proved to be the least effective, showing a decline of 0.23%. In healthcare, notable decreases were observed in the U.S.-registered shares of BioNTech, which fell by 4.4% after announcing a decrease in revenue and profit for 2023 due to a focus on the development of cancer drugs.

Additionally, shares of COVID-19 vaccine manufacturers experienced a downturn: Moderna lost 1.9% in value, while Novavax dropped by 2.2%. A rise in the consumer goods sector was led by shares of Amazon.com, which increased by 1.3%. Furthermore, Tesla shares grew by 2.5% following news of a price increase for Model Y cars produced in China by 5,000 yuan ($694.55) starting April 1.

In addition to successes in the consumer sector, shares of Chipotle Mexican Grill rose by 3.5% after the board of directors announced a decision to conduct a 50-for-1 stock split. Shares of Equinix lost 2.3% in value following a report by research firm Hindenburg Research that it had taken a short position on this data center operator's stock. The Japanese yen faced challenges following the Bank of Japan's decision to raise interest rates for the first time in 17 years. Analysts believe this move contributes to maintaining a significant yield differential between U.S. Treasury bonds and Japanese government bonds, putting pressure on the yen. The European STOXX 600 index remained unchanged throughout the day, while shares of Kering, the owner of the luxury brand Gucci, experienced a decline following announcements of potential profit reductions.

In Tokyo, the Nikkei index remained closed due to a national holiday in Japan on Wednesday, while the broader Asia-Pacific MSCI index outside Japan showed no changes. In Seoul, the market rose by 1.3%, contributing to an overall growth of 5.6% in the Asia-Pacific region. Samsung's shares saw a significant increase following Nvidia's announcement about the start of using high-bandwidth memory (HBM) chips manufactured by the South Korean chipmaker. Chinese stock markets slightly rose after the national central bank kept the key lending rates unchanged, aligning with analysts' expectations. The Shanghai Composite Index increased by 0.5%, while the Hong Kong Hang Seng Index went up by 0.2%. Key figures of the European Central Bank (ECB) expressed support for June as the optimal moment for initiating interest rate cuts, with some advocating for four reductions within the current year.

Christine Lagarde, President of the ECB, emphasized the importance of flexibility in decision-making at an event in Frankfurt on Wednesday: "Our actions must be based on current data and considered at each meeting. This means we cannot make any predetermined commitments regarding the specific direction of interest rates following their initial reduction." By the close of the trading day, the euro had notably strengthened against the dollar, rising by 0.51% to reach $1.092.

Meanwhile, oil prices adjusted after reaching multi-month highs, influenced by the strengthening of the dollar. The price of Brent crude oil fell by 1.95%, settling at $81.68 per barrel, while gold was valued at $2185.69 per ounce, remaining below the record monthly high of $2194.99.

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