Investors continue to kick tires in cyclical sectors, but it’s a lot to expect the S&P 500 to be higher, with Communication Services (XLC) and Technology (XLK) finishing lower.

The S&P 500 is still in a beautiful up-channel.

What Carries the Rally Baton Next?

An assumption of six to seven rate cuts in 2024 sparked and carried the rally from late October to mid-January. Then, the rally was based on Artificial Intelligence (AI), with Nvidia (NVDA) becoming the most important stock in the world, according to Goldman Sachs.

NVDA has seen the rate of change turn lower, and the Relative Strength Index (RSI) is still screaming ‘overbought’ so it might pull back.

 

Well, if NVDA pulls back, investors will turn to the Federal Reserve again. That makes today’s Personal Consumption Expenditures (PCE) report so important. The thing is, more members of the Federal Open Market Committee (FOMC) are hinting at wanting to remain higher for longer.

After the Close, Snowflake Inc (SNOW) posted results that beat on the top and bottom lines, but guidance was lackluster, and the stock got whacked by 20%. The stocks have been on a tear, so giving some back isn’t totally unexpected, but 20% haircuts are tough.

The company’s CEO should weather the session nicely today, especially since he was selling with both hands. Insider selling isn’t always a red flag unless it looks like a fire sale.

Today’s Session

PCE inflation data came in largely as expected.

Key Metrics

Note:

Core service, ex shelter, +3.4% (Shelter +6.1%).  This data officially puts March off the table and more than likely May as well.

Consumer Spending

Goods swooned as services remained strong.

The +0.2% increase in spending was significantly below consensus of +0.7% and this might be the main reason bond yields eased a bit and stocks caught a bid ahead of the open.

Comments

I noticed that before the open the price on SNOW had dropped to EXACTLY the 200 day moving average. Coincidence? Chuck Lucente on 2/29/2024 9:58:00 AM

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