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The latest University of Michigan report showed a decline in consumer confidence and a worrying increase in inflation expectations, causing market reactions.

Consumer Sentiment Falls In May, Inflation Expectations Strongly Exceed Fed&#39;s 2% Goal: &#39;They Now Perceive Negative Developments&#39;

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Wall Street experienced a quiet session during morning trading on Tuesday, influenced by a lack of significant economic data and minimal updates on earnings from major large-cap companies.

US Stocks Eye Fourth Positive Session Despite Hawkish Fed Remarks; Disney, Palantir Tumble; Treasury Yields Fall: What&#39;s Driving Markets Tuesday?

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The latest University of Michigan report shows a troubling drop in U.S. consumer confidence, signaling potential weakness in household finances alongside a worrying increase <a href="https://www.benzinga.com/topic/inflation">in consumer inflation expectations.</a>
&#8220;Consumer sentiment retreated about 13% this May following three consecutive months of very little change. This 10 index-point decline is statistically significant and brings sentiment to its lowest reading in about six months,&#8221; Surveys of Consumers Director&nbsp;Joanne Hsu, said.
<h3 class="wp-block-heading">UMich Consumer Sentiment Report For May: Key Highlights</h3>
<ul>
<li>The University of Michigan consumer sentiment index eased from 77.9 in April to 66.5 in May, missing expectations of 76, according to preliminary data. It marks the lowest level in consumer sentiment since November 2023. </li>
<li>The sub-index for consumer expectations tumbled from 76 to 66.5, well below the expected 75.</li>
<li>The sub-index for current conditions fell from 79 to 68.8, hitting a 6-month low, missing the predicted 79.</li>
<li>The year-ahead inflation expectations rose further from 3.2% to 3.5%, topping the 3.2% expected. Long-term inflation expectations rose from 3.1%.</li>
</ul>
<h3 class="wp-block-heading">Economist Takeaways</h3>
According to Hsu, &#8220;Consumers in western states exhibited a particularly steep drop. While consumers had been reserving judgment for the past few months, they now perceive negative developments on a number of dimensions.&#8221;
She emphasized that consumers are expressing concerns about the possibility of inflation, unemployment, and interest rates all trending unfavorably in the upcoming year.
&#8220;Year-ahead inflation expectations rose from 3.2% last month to 3.5% this month, remaining above the 2.3-3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations remain elevated relative to the 2.2-2.6% range seen in the two years pre-pandemic,&#8221; she added.
<h3 class="wp-block-heading">Market Reactions</h3>
Stocks slightly trimmed daily gains following the release of the University of Michigan&#8217;s Consumer Sentiment report. 
The S&amp;P 500 index, as tracked by the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), was 0.3% higher at 10:08 a.m. in New York, while the tech-heavy Nasdaq 100, as monitored through the Invesco QQQ Trust (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>), rose 0.5%. 
The dollar saw a marginal uptick, aided by the hotter-than-forecasted consumer expectations data. Treasury yields were slightly higher on Friday, sending bond-related ETFs, such as the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>), lower.
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Consumer Sentiment Falls In May, Inflation Expectations Strongly Exceed Fed's 2% Goal: 'They Now Perceive Negative Developments'

Wall Street experienced a quiet session during morning trading on Tuesday, influenced by a lack of significant economic data and minimal updates on earnings from <a href="https://www.benzinga.com/money/best-large-cap-stocks">major large-cap companies.</a>
Traders largely disregarded the latest hawkish comments from Minneapolis Fed President Neel Kashkari, who noted progress on inflation seen in the latter half of 2023 had stalled and mentioned the Federal Reserve might raise rates if inflation becomes persistent. 
Kashkari also revealed he initially predicted two rate cuts for the year, but now anticipated possibly maintaining two, or reducing to one or none by the June Summary of Economic Projections.
The S&amp;P 500 saw a modest increase of 0.2% around midday in New York, with similar gains in the tech-heavy Nasdaq 100 and the Dow Jones, all of which are poised for their fourth consecutive session of gains. The iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>), representing small caps, performed notably well, rising 0.8%.
Treasury yields declined slightly by about 6 basis points across various maturities from 5 to 30 years, with the 10-year benchmark decreasing to 4.4%, marking a fifth consecutive day of declines. This led to a continued rally in bonds, exemplified by a 1.1% increase in the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>).
In corporate news, chipmaker Palantir Technologies Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PLTR#NASDAQ">PLTR</a>) saw its shares drop over 13% following weaker-than-expected guidance. Walt Disney Co (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIS#NYSE">DIS</a>) also fell sharply by over 10%, setting it on course for its worst performance day since November 2022.
In the cryptocurrency and precious metals markets, Bitcoin (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/btc/usd">BTC</a>) remained stable at $63,800, while both gold and silver declined by 0.5%
<h1 class="wp-block-heading">Tuesday&#8217;s Performance In Major U.S. Indices, ETFs</h1>
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Major Indices</td>
<td>Price</td>
<td>1-day %chg</td>
</tr>
<tr>
<td>Russell 2000</td>
<td>2,072.99</td>
<td>0.7%</td>
</tr>
<tr>
<td>S&amp;P 500</td>
<td>5,193.42</td>
<td>0.2%</td>
</tr>
<tr>
<td>Nasdaq 100</td>
<td>18,137.08</td>
<td>0.2%</td>
</tr>
<tr>
<td>Dow Jones</td>
<td>38,914.33</td>
<td>0.2%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Updated at 12 p.m. EDT</figcaption></figure>
The&nbsp;SPDR S&amp;P 500 ETF Trust&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) rose 0.3% to $518.80, the&nbsp;SPDR Dow Jones Industrial Average (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIA#NYSE">DIA</a>) rose 0.6% to $389.01 and the tech-heavy&nbsp;Invesco QQQ Trust&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>) rose 0.3% to $441.54, according to&nbsp;<a href="https://pro.benzinga.com/dashboard">Benzinga Pro data</a>.&nbsp;
Sector-wise, the Real Estate Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLE#NYSE">XLE</a>) outperformed, up 1.1%, followed by the Materials Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLB#NYSE">XLB</a>), 1%. The Consumer Discretionary Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLY#NYSE">XLY</a>) was the major laggard, down 0.3%.
<h1 class="wp-block-heading">Tuesday&#8217;s Stock Movers</h1>
<ul>
<li>Rivian Automotive Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/RIVN#NASDAQ">RIVN</a>) climbed over 5% amid rumors of a potential partnership with Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>).</li>
<li>Simon Property Group Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPG#NYSE">SPG</a>) rose over 3% after the company reported upbeat results during the previous quarter. On the other hand, Lucid Group Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/LCID#NASDAQ">LCID</a>) fell over 14% after posting mixed quarterly results</li>
<li>Other stocks reacting to earnings were GlobalFoundries Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GFS#NASDAQ">GFS</a>) up over 8%, Vertex Pharmaceuticals Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VRTX#NASDAQ">VRTX</a>), Datadog Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/DDOG#NASDAQ">DDOG</a>) down over 10%, Duke Energy Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DUK#NYSE">DUK</a>) up 1%, Transdigm Group Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TDG#NYSE">TDG</a>) down 2%, DBA Sempra (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SRE#NYSE">SRE</a>) down 0.4%, Kenvue Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KVUE#NYSE">KVUE</a>) up 5%, Rockwell Automation Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ROK#NYSE">ROK</a>) up 1%, Microchip Technology Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MCHP#NASDAQ">MCHP</a>) down 1%, Williams Companies Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/WMB#NYSE">WMB</a>) up 0.8%, Fidelity National Information Services (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FIS#NYSE">FIS</a>) and Axon Enterprise Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AXON#NASDAQ">AXON</a>) down 4%.</li>
<li>Companies reporting after the close include Arista Networks, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ANET#NYSE">ANET</a>), Coupang, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CPNG#NYSE">CPNG</a>), Electronic Arts Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/EA#NASDAQ">EA</a>), GoPro, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GPRO#NASDAQ">GPRO</a>), iRobot Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/IRBT#NASDAQ">IRBT</a>), Luminar Technologies, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/LAZR#NASDAQ">LAZR</a>), Match Group, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MTCH#NASDAQ">MTCH</a>), Occidental Petroleum Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/OXY#NYSE">OXY</a>), Reddit, Rivian Automotive, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/RIVN#NASDAQ">RIVN</a>), Twilio Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TWLO#NYSE">TWLO</a>), Wynn Resorts, Limited (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/WYNN#NASDAQ">WYNN</a>), RingCentral, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RNG#NYSE">RNG</a>) and Lyft, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/LYFT#NASDAQ">LYFT</a>).</li>
</ul>
Read Now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/05/38670071/nvidia-is-de-facto-ai-standard-for-the-foreseeable-future-goldman-sachs-analyst-rev">Nvidia Is &#8216;De Facto AI Standard For The Foreseeable Future&#8217;: Goldman Sachs Analyst Revises Share Price Expectations</a>
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US Stocks Eye Fourth Positive Session Despite Hawkish Fed Remarks; Disney, Palantir Tumble; Treasury Yields Fall: What's Driving Markets Tuesday?

In April, the U.S. economy added 175,000 jobs, falling short of expectations and down from the 315,000 jobs <a href="https://www.benzinga.com/economics/macro-economic-events/24/05/38612469/job-market-cools-in-april-payrolls-miss-forecasts-wages-rise-less-than-expected">added the previous month. </a>
Surprisingly, the unemployment rate inched up from 3.8% to 3.9%, although maintaining a level below 4% for the 27th consecutive month—a streak not seen since the late 1960s.
Nominal average hourly earnings growth slowed to 0.2% in April, slightly below expectations and a decrease from the 0.3% growth rate seen over the previous six months. Year-on-year, nominal wage growth decreased to 3.9%, failing to meet the anticipated 4%.
Overall, the April jobs report was cooler than expected, suggesting a shift towards a better rebalance between labor supply and demand, and indicating a slowdown in economic growth following several robust quarters. 
Notably, this subdued jobs report has rekindled expectations for the Federal Reserve to ease monetary policy, with traders now pricing in a 71% probability of an interest rate cut by September, according to CME Group Fed Watch Tool. 
Yields on Treasury bonds collapsed, with the 2-year yield dropping from 4.89% to 4.79%. Long-term bonds rose, with the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) up 0.6%. For the stock market, this has been another sigh of relief, effectively dispelling concerns over a tightening of Federal Reserve policies. The tech-heavy Nasdaq 100, as tracked by the Invesco QQQ Trust (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>), rallied 1.5%. 
Economists and analysts have begun to dissect the implications of this data for the markets and Federal Reserve policy.
<h3 class="wp-block-heading">There&#8217;s Little To Cheer On A Soft Jobs Report</h3>
&#8220;As I feared after Chair Powell&#8217;s presser on Wednesday, he probably already knew that a softer Job Report was on our way today,&#8221; Andrea Lisi, CFA stated. The expert expressed concerns about a potential economic downturn following the April jobs data, emphasizing that &#8220;this economic cycle is showing signs of mirroring many others, with a hard landing potentially on the horizon.&#8221; Lisi underscored the importance of the labor market, warning that &#8220;The average American&#8217;s financial health is far from robust, a situation that should raise serious concerns.&#8221;
Craig Shapiro, macro advisor for LaDuc Trading, also offered a more cautious perspective on the April&#8217;s jobs report, suggesting that the report&#8217;s implications might not be as positive as some might hope. &#8220;This is not unexpected weakness which is what Powell said he would need to see in order to commence cutting,&#8221; Shapiro explained. &#8220;I don&#8217;t believe this is reason to get excited about risk assets. I believe the opposite,&#8221; he stated. Shapiro highlighted that the economy is slowing down and the labor market has peaked, which is expected to gradually decline, but the sticky inflation will make the Fed&#8217;s job to cut more difficult. 
<h3 class="wp-block-heading">Goldilocks Is Back, And Markets Should Love It</h3>
Mohamed El Erian, chief economic adviser at Allianz, presented a more positive spin, describing the jobs report as a &#8220;Goldilocks&#8221; scenario. He stated, &#8220;Still solid monthly employment creation of 174,000.&#8221; Lower wage growth of 0.2% (month-over-month) and 3.9% (annual). El Erian also highlighted the sustained labor force participation from the previous month, which he believes the Federal Reserve and markets will find appealing.
Also Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, described the report as a &#8220;Goldilocks payrolls report,&#8221; noting the cooling labor market as a positive development. &#8220;Finally, some weakness in the labor market to take pressure off bond yields and maybe accelerate rate cut expectations,&#8221; he observed. Tentarelli thinks that if inflation remains contained and job data continues to show moderation, the Federal Reserve might consider an initial rate cut in September. 
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, interpreted the report as favorable for the stock market. He remarked that &#8220;the market should love this report&#8221; due to the easing wage inflation pressures. Zaccarelli emphasized that &#8220;as long as the Fed maintains an easing bias,&#8221; the market outlook remains optimistic, predicting potential rate cuts within the year.
<h3 class="wp-block-heading">Higher Chances of Fed Easing</h3>
John Lynch, chief investment officer for Comerica Wealth Management,&nbsp;believes the data will bring monetary accommodation back into consideration, particularly as &#8220;the burden of proof is on corporate profits to exceed forecasts, providing fundamental support for equities in the coming months.&#8221;
According to Charlie Ripley, senior investment strategist for Allianz Investment Management, data from the April labor market report has softened the market&#8217;s perception of the U.S. economy&#8217;s strength and reopened discussions about potential rate cuts this year. He believes the Federal Reserve will view this data favorably, as it could alleviate some of the pressure associated with maintaining a higher-for-longer interest rate policy.
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Image generated using artificial intelligence via Midjourney.

Jobs Growth Slows, Unemployment Ticks Up, Wage Increase Cools: 'The Market Should Love This Report'

Activity in the services sector experienced a sharp slowdown in April, cooling more than expected and showing the first <a href="https://www.benzinga.com/topic/macro-economic-events">decline since December 2022.</a>
What Happened: After 15 straight months of growth, sentiment in the services sector activity entered into contraction last month, according to the Institute for Supply Management (ISM).
<h3 class="wp-block-heading">April ISM Services PMI Report: Key Highlights</h3>
<ul>
<li>The overall ISM Services PMI fell to 49.4%, marking a 2 percentage points decline from March's 51.4% and missing the expected growth to 52%. </li>
<li>The subindex for Business Activity fell to 50.9% in April, marking a significant drop of 6.5 percentage points from March&#8217;s 57.4%.</li>
<li>The subindex for New Orders continued to expand for the 16th consecutive month, but a slower pace, declining from March&#8217;s 54.4% to 52.2% in April, and missing expectation of 54.5%. </li>
<li>The subindex for Prices Paid rose sharply from 53.5% to 59.2%, indicating worsening price pressures felt by services providers, and missing the expected rise to 55%. </li>
<li>The subindex for Employment tumbled from 48.5% to 45.9%, missing the predicted 49%. </li>
</ul>
Anthony Nieves, chair of the Institute for Supply Management Services Committee, blamed the decline in the composite index in April on &#8220;lower business activity, slower new orders growth, faster supplier deliveries and the continued contraction in employment.&#8221; 
&#8220;Survey respondents indicated that overall business is generally slowing, with rates varying by company and industry,&#8221; Nieves says. &#8220;Employment challenges continue to be primarily due to difficulties in backfilling positions and/or controlling labor expenses. The majority of respondents indicate that inflation and geopolitical issues remain concerns." 
<h3 class="wp-block-heading">Market Reactions: Stocks, Bonds Trim Gains</h3>
Following the ISM Services PMI data, market reactions saw stocks and bonds trimming their early morning gains, influenced by a <a href="https://www.benzinga.com/economics/macro-economic-events/24/05/38612469/job-market-cools-in-april-payrolls-miss-forecasts-wages-rise-less-than-expected">cooler-than-expected jobs report.</a> 
Traders interpreted the services gauge negatively as it signaled a contraction in overall activity along with higher prices paid, suggesting a stagflationary scenario characterized by reduced growth and persistently high inflation.
The tech-heavy Nasdaq 100, as tracked by the Invesco QQQ Trust (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>), softened its rally from 2.1% to 1.6% on the day. The S&amp;P 500, as monitored through the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), eased from an intraday high of 5,139 points to 5,110 points. 
Treasury yields also trimmed declines with the 2-year yield recovering from a decline of over 10 basis points to a smaller one of 5 basis points. The iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) was up 0.5% at 10:20 a.m. in New York, scaling back daily gains. 
Now Read: <a href="https://www.benzinga.com/news/large-cap/24/05/38598252/shocker-of-2024-utilities-overtake-tech-sector-10-stocks-behind-the-shift">Shocker Of 2024 &#8211; Utilities Overtake Tech Sector — 10 Stocks Behind The Shift</a>
Image: Midjourney

Services Sector Activity Gauge Contracts, Stocks, Bonds Trim Gains: 'Business Is Slowing'

The Federal Reserve&#8217;s recent policy decision kept interest rates unchanged, continuing since July 2023. However, it announced a significant reduction in its quantitative tightening (QT) program, <a href="https://www.benzinga.com/federal-reserve">starting in June</a>. 
QT involves selling off assets to decrease money supply and raise interest rates. This move follows massive bond purchases during the pandemic, which suppressed interest rates. While QT can help control inflation, it also reduces liquidity in the economy and can lead to higher interest rates and tighter monetary conditions. 
The Fed aims to avoid a repeat of the 2019 &#8220;repo crisis&#8221; caused by QT, and plans to scale back QT to $25 billion, more than half of its current rate.
Related: <a href="https://www.benzinga.com/economics/macro-economic-events/24/05/38584705/federal-reserve-takes-cautious-stand-on-inflation-powell-signals-preference-for-r">Federal Reserve Takes Cautious Stand On Inflation, Powell Signals Preference For Rate Cuts Over Hikes</a>
<h1 class="wp-block-heading">Redditors Question the Effectiveness of Fed&#8217;s Decision</h1>
Reddit discussions on r/stocks provided valuable insights into the Federal Reserve&#8217;s recent decision to reduce quantitative tightening (QT) and its potential impact on inflation and the economy. 
Redditors expressed diverse opinions, ranging from concerns about inflation to the Fed&#8217;s motives and the broader economic implications.
Redditors like jigglyjohnson13 questioned the effectiveness of the Fed&#8217;s decision, citing concerns about inflation and the M2 money supply. They suggested that the Fed may be influenced by the theory that COVID-19 relief caused an explosion in M2, making it challenging to bring inflation down.
Others, such as 95Daphne and goodbodha, believe that the Fed&#8217;s decision is driven by the need to maintain stability in the banking system. They argue that the Fed is trying to prevent a financial accident, similar to what happened in the past, and ensure that banks have sufficient reserves.
Some, like Malamonga1 and Invest0rnoob1, see the Fed&#8217;s decision as a means to stimulate the economy. They suggest that while the decision may not directly address inflation, it could prevent a crash and support banks facing challenges.
<blockquote class="wp-block-quote">&#8220;I think the economy is doing worse than they are admitting. It's mostly being propped up by government spending. They are slowing QT to prevent a crash.&#8221;
<cite>Redditor <a href="https://www.reddit.com/r/stocks/comments/1chwj1e/comment/l25cvuh/?utm_source=share&amp;utm_medium=web3x&amp;utm_name=web3xcss&amp;utm_term=1&amp;utm_content=share_button">Invest0rnoob1</a></cite></blockquote>
<h1 class="wp-block-heading">Impact On Investment Strategies</h1>
Redditors like fairlyaveragetrader believe the Fed&#8217;s decision could impact investment strategies. They suggest the decision could make long-term bonds more attractive and lead to lower rates over the next 18 months, affecting stock investments and overall market outlook.
<blockquote class="wp-block-quote">&#8220;Inflation is really only being pushed by two things, housing and auto insurance and neither of those are responsive to QT. What the Fed did today is tell you to buy bonds. The fact they are slowing down the selling is going to make the long end more attractive. Rates overall, over the next 18 months, likely to fall.&#8221;
<cite>Redditor <a href="https://www.reddit.com/r/stocks/comments/1chwj1e/comment/l25wz4a/?utm_source=share&amp;utm_medium=web3x&amp;utm_name=web3xcss&amp;utm_term=1&amp;utm_content=share_button">fairlyaveragetrader</a></cite></blockquote>
ETFs such as the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>), the Vanguard Long-Term Treasury ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGLT#NASDAQ">VGLT</a>), and the SPDR Portfolio Long Term Treasury ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPTL#NYSE">SPTL</a>) provide exposure to long-term Treasury bonds. The iShares 7-10 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/IEF#NASDAQ">IEF</a>) is a popular way to get exposure to medium-to-long-term Treasury bonds.
The diverse opinions expressed by Redditors highlight the complexity of the Federal Reserve&#8217;s decision-making process and its potential impact on various aspects of the economy. 
Investors should consider these perspectives when analyzing the implications of the Fed&#8217;s decision on their investment strategies.
Read Next: <a href="https://www.benzinga.com/news/earnings/24/05/38593416/wall-street-inches-up-post-fed-chipmakers-rebound-gold-crude-falter-whats-driving-market-thursday">Wall Street Inches Up After Powell&#8217;s Inflation Remarks; Chipmakers Rebound; Gold, Crude Falter: What&#8217;s Driving Markets Thursday?</a>
Illustration created using artificial intelligence via MidJourney.

Social Media

Markets

iShares Trust Barclays 7-10 Year Treasury Bond Fund

SPTL

VGLT

Redditors Question Change To Fed Policy: Are They 'Slowing QT To Prevent A Crash'?

Federal Reserve Chairman Jerome Powell&#8216;s Wednesday remarks hint at a more patient and cautious approach to monetary policy, suggesting interest rates may hold steady <a href="https://www.benzinga.com/markets/equities/24/05/38563545/powell-keeps-hawks-at-bay-says-interest-rate-hike-unlikely-stocks-gold-rally-while-treasury-yiel">longer than anticipated</a>. 
During the press conference following the Fed&#8217;s decision to hold rates steady in May, Powell emphasized the next policy is &#8220;unlikely&#8221; to be a rate hike, pushing back market fears of tighter interest rates. 
Indeed, once there is enough confidence of inflation returning to the target level of 2%, &#8220;rate cuts would be in scope,&#8221;<a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/05/38568674/hawkish-fed-risk-fades-after-powells-remarks-he-set-the-bar-extremely-high-for-rate"> the Fed chair stated. </a>
His statements were widely interpreted by the financial community as having dovish undertones. This perspective was also reflected in subsequent market reactions which saw Treasury yields falling. 
As a result, bonds witnessed some gains, with the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) up 0.8%. 
Broader uncertainties surrounding Fed policies led to volatility in risky assets, with stocks erasing gains during the session and the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) closing 0.3% lower. 
It is evident that after this May&#8217;s FOMC meeting and Powell&#8217;s subsequent comments, there is a diverse range of opinions among Wall Street analysts regarding the future direction of interest rates. Benzinga has gathered analyst perspectives ranging from the most hawkish to the most dovish.
<h3 class="wp-block-heading">Bank of America Sticks To One Cut Projection</h3>
Michael Gapen, economist at Bank of America, believes that the Federal Reserve now anticipates a longer period before it feels confident enough to lower interest rates.
&#8220;The Fed has shifted to a wait-and-see mode and is prepared to keep its policy rate where it is for as long as needed. Needing more time means later cuts,&#8221; he stated. 
He was unsurprised by the balance sheet policies, finding the Treasury runoff cap slightly lower than expected but aligned with the goal of a prolonged reduction process. Gapen agrees with a high bar for rate hikes and projects the first-rate cut in December, assuming inflation remains stickier and slower to come down.
<h3 class="wp-block-heading">Goldman Sachs Confirms Two Rate Cuts, Backs Powell&#8217;s Declining Inflation Outlook</h3>
Goldman Sachs&#8217; David Mericle interpreted Federal Reserve Chair Jerome Powell&#8216;s statements as primarily dovish, with the investment bank maintaining a forecast of two rate cuts later in the year. 
&#8220;The most notable aspect of the press conference was Powell's strong pushback against the possibility of rate hikes,&#8221; Mericle stated. 
Mericle also pointed out that Powell would be comfortable delaying rate cuts if inflation progress faltered, indicating that the bar for raising rates remains high.
&#8220;Powell's comments on inflation were particularly dovish,&#8221; Mericle noted, aligning with Goldman's inflation outlook which anticipates a shift back to lower inflation levels within the year. He emphasized Powell&#8217;s dismissal of early 2023&#8217;s inflation uptick and his confidence in declining housing costs and supply-side improvements contributing to disinflation.
<h3 class="wp-block-heading">ING Sees Three Rate Cuts Starting From September</h3>
Powell stressed that the current monetary policy is &#8220;restrictive&#8221; and considered an interest rate hike &#8220;unlikely,&#8221; said James Knightley, economist at ING Group. 
He revisited his April 16 remarks, expressing concern that gaining confidence in declining inflation and proceeding with interest rate cuts is taking &#8220;longer than thought.&#8221;
With inflation now dropping below 3%, Powell emphasized a renewed focus on the Fed&#8217;s employment objectives, stating that the current policy stance &#8220;is in a good place.&#8221;
ING Group forecasts the first rate cut could come as early as the September FOMC meeting, with additional reductions in November and December. This forecast is more aggressive compared to the general consensus, which anticipates a total of 50 basis points cut this year. ING&#8217;s outlook is tempered by business and employment surveys signaling a slowdown, suggesting that more pronounced easing of inflation and hiring may align to justify the anticipated rate cuts.
<h3 class="wp-block-heading">Citi Retains The Street&#8217;s Most Dovish Outlook</h3>
Citi analysts focused on the Fed&#8217;s dovish pivot against market fears of a hawkish turn. 
&#8220;Chair Powell and the committee dovishly suggested that while progress on inflation had stalled in Q1, cuts are still coming,&#8221; they stated.
Citi expects that either softer inflation data or cooler labor market developments would bring the Fed to lower rates.
Citi predicts a start to rate reductions as early as July, with rate cuts proceeding at each meeting for a total of 100bp of cuts by year end. 
Now Read: <a href="https://www.benzinga.com/economics/macro-economic-events/24/05/38557569/april-jobs-report-preview-bank-of-america-anticipates-solid-payrolls-growth-risin">April Jobs Report Preview &#8211; Bank Of America Anticipates Solid Payrolls Growth, Rising Wage Pressures</a>
Image: Shutterstock

Federal Reserve Takes Cautious Stand On Inflation, Powell Signals Preference For Rate Cuts Over Hikes

To gain an edge, this is what you need to know today.
<img alt="" src="https://thearorareport.com/wp-content/uploads/2024/04/2024-04-30_07h52_43.png" style="height:389px; width:624px" />
<h3>Samsung Overtakes Apple</h3>
Please <a href="https://thearorareport.com/chart-analysis-stock-market-fomc-meeting-samsung-overtakes-apple-tlt-mc-04302024">click here</a> for an enlarged chart of 20+ year iShares 20+ Year Treasury Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tlt#NASDAQ">TLT</a>).
Note the following:
<ul>
<li>The chart shows that bonds have fallen this year.</li>
<li>The chart shows that bonds are consolidating in the mini support zone.</li>
<li>Lower bonds mean higher yields.&nbsp;Higher yields mean lower PE ratios.&nbsp;Lower PE ratios mean lower stock prices, unless earnings rise.</li>
<li>So far, due to a strong economy because of the Fed&rsquo;s second blunder and reckless spending by the government, earnings are better than expected.&nbsp;45% of S&amp;P 500 companies have reported earnings.&nbsp;About 77% are above consensus.&nbsp;This is helping the stock market to levitate.&nbsp;We have <a href="http://blog.thearorareport.com/tesla-042924/">previously described</a> the Fed&rsquo;s second blunder.&nbsp;The Fed&rsquo;s second blunder has a major impact on your investments.&nbsp;&nbsp;</li>
<li>Just released data shows more bad news on inflation.&nbsp;Employment Cost Index came at 1.2% vs. 1.0% consensus.</li>
<li>The FOMC meeting starts today.&nbsp;FOMC will announce its decision at 2pm ET tomorrow followed by Powell&rsquo;s press conference at 2:30am ET.</li>
<li>The AI phone from Samsung Electronics Co Ltd (OTC: <a class="ticker" href="https://www.benzinga.com/stock/ssnlf#OTC">SSNLF</a>) is proving popular.&nbsp;Apple Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/aapl#NASDAQ">AAPL</a>) has lagged behind in AI.&nbsp;Institutions continue to sell AAPL stock. &nbsp;According to a just released report, Samsung has now taken over Apple as the largest provider of smart phones.</li>
<li>There are three notable earnings that investors should pay attention to:
<ul>
<li>Samsung has quadrupled its net profit due to demand from artificial intelligence.&nbsp;Its high bandwidth memory is flying off the shelves.&nbsp;Revenues for the quarter rose 13%.</li>
<li>Pharmaceutical giant Eli Lilly And Co (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lly#NYSE">LLY</a>) reported earnings better than the consensus and whisper numbers.&nbsp;Lilly is also raising its FY24 EPS projection to $13.50 - $14.00 from $12.20 - $12.70. Lilly&rsquo;s performance is due to strong sales of weight loss drugs Mounjaro and Zepbound.&nbsp;LLY stock is up about 6% as of this writing in the premarket.&nbsp; As full disclosure, LLY stock is in The Arora Report&rsquo;s ZYX Buy Model Portfolio.&nbsp; Members of The Arora Report now have a gain of 145% on LLY stock.</li>
<li>NXP Semiconductors NV (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nxpi#NASDAQ">NXPI</a>), a leader in automotive semiconductors, reported earnings better than the consensus and whisper numbers.&nbsp;As full disclosure, NXPI is in The Arora Report&#39;s&nbsp;ZYX Buy Model Portfolio.&nbsp;NXPI is trading up over 4%&nbsp; as of this writing in the premarket.&nbsp;</li>
</ul>
</li>
<li>There will be another indication of demand for artificial intelligence after the market close when three important companies for AI report earnings &ndash; Advanced Micro Devices, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amd#NASDAQ">AMD</a>), Amazon.com, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amzn#NASDAQ">AMZN</a>), and Super Micro Computer Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/smci#NASDAQ">SMCI</a>).</li>
</ul>
<h3>Europe</h3>
The Eurozone economy has avoided a recession and is resilient.&nbsp; Q1 GDP came at 0.3% quarter-over-quarter vs. 0.1% consensus.
There is selling in European stocks because of the strong GDP data weighing on rate cut expectations.
<h3>Magnificent Seven Money Flows</h3>
In the early trade, money flows are positive in AMZN.
In the early trade, money flows are neutral in AAPL and Alphabet Inc Class C (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/goog#NASDAQ">GOOG</a>).
In the early trade, money flows are negative in Meta Platforms Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/meta#NASDAQ">META</a>), Microsoft Corp (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/msft#NASDAQ">MSFT</a>), NVIDIA Corp (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nvda#NASDAQ">NVDA</a>), and Tesla Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tsla#NASDAQ">TSLA</a>).
In the early trade, money flows are negative in SPDR S&amp;P 500 ETF Trust&nbsp;(ARCA:SPY) and Invesco QQQ Trust Series 1 (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqq#NASDAQ">QQQ</a>).
<h3>Momo Crowd And Smart Money In Stocks</h3>
The momo crowd is buying stocks in the early trade.&nbsp;Smart money is inactive in the early trade.
<h3>Gold</h3>
The momo crowd is selling gold in the early trade.&nbsp;Smart money is inactive in the early trade.
For longer-term, please see gold and silver ratings.
The most popular ETF for gold is SPDR Gold Trust (ARCA:GLD).&nbsp;The most popular ETF for silver is iShares Silver Trust (ARCA:SLV).&nbsp;
<h3>Oil</h3>
The momo crowd is buying oil in the early trade. Smart money is inactive in the early trade.
For longer-term, please see oil ratings.
The most popular ETF for oil is United States Oil ETF (ARCA:USO).
<h3>Bitcoin</h3>
Bitcoin (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/btc/usd">BTC</a>) is trading around $61,000.&nbsp;$60,000 is a key psychological support level.&nbsp;Whales will likely try to hold bitcoin above $60,000.&nbsp;However, the momo crowd that bought bitcoin at $70,000 on hopes of bitcoin going to $100,000 after bitcoin halving is likely to panic and sell.
<h3>Protection Band And What To Do Now</h3>
It is important for investors to look ahead and not in the rearview mirror.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. This is a good way to protect yourself and participate in the upside at the same time.
You can determine your protection bands by adding cash to hedges.&nbsp;The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.&nbsp;If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.&nbsp;When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.&nbsp;High beta stocks are the ones that move more than the market.
<h3>Traditional 60/40 Portfolio</h3>
Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.
Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of seven year duration or less.&nbsp; Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.
The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever <a href="https://thearorareport.com/generate-wealth-newsletter">Generate Wealth Newsletter</a>.
This article is from an unpaid external contributor. It does not represent Benzinga&#39;s reporting and has not been edited for content or accuracy.

Tech

General

AMZN

GOOG

MSFT

NVDA

NXPI

SMCI

SSNLF

TSLA

FOMC Meeting Samsung Over Takes Apple, AI Demand Indication Ahead From AMD, Amazon And Super Micro

In a tumultuous day for tech stocks, the collective market value of the Magnificent 7 tech giants plummeted by over $300 billion in the first trading hour on Thursday, primarily fueled by a weaker-than-expected revenue outlook from Meta Platforms Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/META#NASDAQ">META</a>) and concerning economic indicators arising from the first-quarter<a href="https://www.benzinga.com/economics/macro-economic-events/24/04/38429782/us-economy-grows-1-6-in-q1-slightly-below-expectations-as-price-pressures-weigh-o"> gross domestic product release.</a>
What Happened: Meta Platforms outperformed Wall Street's expectations with first-quarter revenue of $36.45 billion, a 27% increase year-over-year, and earnings per share of $4.71, beating the predicted $4.32. Investors pulled back after the social media giant issued subdued guidance <a href="https://www.benzinga.com/news/earnings/24/04/38416273/meta-platforms-q1-earnings-highlights-facebook-owner-beats-estimates-but-guidance-higher-costs-ding">for the upcoming quarter.</a> 
The company&#8217;s forecast for the second quarter anticipates revenue between $36.5 billion and $39 billion, putting the lower end of the range below the consensus estimate of $38.3 billion. 
Additionally, the social media giant anticipates increases in infrastructure and legal costs — pushing full-year expenses to between $96 billion and $99 billion. 
Compounding the tech sector&#8217;s woes were the latest GDP figures released Thursday by the Bureau of Labor Statistics. 
The U.S. economy expanded at a significantly reduced pace of 1.6% on an annualized basis in the first quarter of 2024, a sharp deceleration from the previous quarter&#8217;s 3.4% growth rate and well below the forecasted 2.5%.
Inflation concerns were reignited with the Personal Consumption Expenditure (PCE) price indices for the first quarter showing an increase. 
The headline PCE price index accelerated from 1.8% in the previous quarter to 3.4% , while the core PCE price index, which excludes food and energy prices and is a key inflation measure for the Federal Reserve, climbed from 2% to 3.7%, surpassing expectations of 3.4%.
Read also: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38434513/us-growth-slows-in-q1-yet-inflation-acceleration-signals-stagflation-the-worst-poss">US Growth Slows In Q1, Yet Inflation Acceleration Signals Stagflation: &#8216;The Worst Possible Outcome For The Fed&#8217;</a>
<h3 class="wp-block-heading">Mag7 Stocks, Bond Market React</h3>
The Magnificent Seven had cumulatively wiped out $303 billion of market value by 11 a.m. in New York. 
Meta suffered the heaviest losses, down 13%, shedding $143 billion alone. Microsoft Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NYSE">MSFT</a>) also sharply contributed to the tech market rout, wiping out $126 billion, down 4.3% ahead of the company&#8217;s earnings report after the market close. 
Alphabet Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>) and Amazon.com, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>) both witnessed similar declines, while Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>) managed to avoid losses. 
NVIDIA Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>) and Tesla, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TSLA#NASDAQ">TSLA</a>) saw some gains, outperforming the basket.
The Roundhill Magnificent Seven ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MAGS#NYSE">MAGS</a>) fell 3%. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>Name</th>
<th>Market Cap</th>
<th>Market Cap Loss/Gain (1-day)</th>
<th>1-Day % Change</th>
</tr>
</thead>
<tbody>
<tr>
<td>Microsoft Corporation</td>
<td>$2,905.08B</td>
<td>-$128.47B</td>
<td>-4.37%</td>
</tr>
<tr>
<td>Apple Inc.</td>
<td>$2,602.88B</td>
<td>-$7.08B</td>
<td>-0.27%</td>
</tr>
<tr>
<td>NVIDIA Corporation</td>
<td>$2,018.70B</td>
<td>+$59.39B</td>
<td>+2.94%</td>
</tr>
<tr>
<td>Alphabet Inc.</td>
<td>$1,933.75B</td>
<td>-$54.09B</td>
<td>-2.76%</td>
</tr>
<tr>
<td>Amazon.com, Inc.</td>
<td>$1,783.97B</td>
<td>-$51.15B</td>
<td>-2.81%</td>
</tr>
<tr>
<td>Meta Platforms, Inc.</td>
<td>$1,101.35B</td>
<td>-$132.35B</td>
<td>-13.17%</td>
</tr>
<tr>
<td>Tesla, Inc.</td>
<td>$528.24B</td>
<td>+$11.44B</td>
<td>+1.60%</td>
</tr>
<tr>
<td>Total</td>
<td>$12,873.97B</td>
<td>-$302.91B</td>
<td>N/A</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Updated at 11:00 a.m. ET. </figcaption></figure>
Treasury yields, particularly the two-year note, surged past 5%, reflecting heightened investor anxiety over inflation and its potential implications for future Federal Reserve actions. 
This resulted in a broad sell-off in bonds, with significant losses noted in long-term treasury ETFs such as the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>), which declined 0.8%.
The broader stock market also felt the pinch, with major indices recording significant losses. 
The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) and the tech-heavy Nasdaq 100 index, as tracked by the Invesco QQQ Trust (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>), fell by 1.4% and 1.7%, respectively. 
Notably, the communication services sector was among the hardest hit, with the Communication Services Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLC#NYSE">XLC</a>) plunging 4.4%, marking its worst session since October 2022.
Read now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38415577/tesla-posts-strongest-session-since-january-2022-is-a-trend-reversal-underway">Tesla Posts Strongest Session Since January 2022: Is A Trend Reversal Underway?</a>
Photo via Shutterstock.

Sector ETFs

GOOGL

MAGS

Magnificent 7 Tumble, Wipe Out $300 Billion On Meta's Weak Guidance, Q1 Stagflation Woes

The U.S. economy sharply disappointed economist growth estimates last quarter, yet it surpassed price pressure predictions, indicating that inflation is weighing on real economic activity — a scenario typically <a href="https://www.benzinga.com/money/best-investment-in-stagflation">referred to as stagflation</a>.
The gross domestic product (GDP) advanced at a 1.6% annualized rate in the first quarter of the year, significantly slowing down compared to both the 3.4% growth in Q4 2023 <a href="https://www.benzinga.com/economics/macro-economic-events/24/04/38429782/us-economy-grows-1-6-in-q1-slightly-below-expectations-as-price-pressures-weigh-o">and the 2.5% expected. </a>
It also marks the lowest expansion since the contraction in Q2 2022. Simultaneously, price pressures — as indicated by the Personal Consumption Expenditure (PCE) price index — rose during the quarter. 
The headline PCE price index recorded a 3.4% quarter-on-quarter annualized increase, up from 1.8% earlier, while the core PCE price index — the Fed&#8217;s preferred inflation gauge —soared from 2% to 3.7%, above the expected 3.4%. 
Economists and market experts weigh in on the numbers released Thursday by the Bureau of Economic Analysis. 
<h3 class="wp-block-heading">Experts Signal Rising Stagflationary Risks For The US Economy </h3>
&#8220;For those who do not understand what just happened, we have a weakening economy with rising inflation: The worst possible outcome for the Fed,&#8221; the Kobeissi Letter wrote on social media X. 
Mohamed El-Erian, chief economic adviser at Allianz, emphasizes that any hope pinned on the recent US GDP data to alleviate pressure on US government bond yields will be completely disappointed due to another significant inflation reading. 
This dual challenge of sluggish growth coupled with elevated inflation &#8220;is problematic for the economy and markets, with political and social spillovers,&#8221; the economist added. 
Echoing this message, macroeconomist Craig Shapiro remarked &#8220;Weaker than expected GDP and Personal Consumption but higher than expected Core PCE Index and better labor data. That&#8217;s a stagflationary mess for folks begging for the Fed put to be activated.&#8221;
&#8220;This report was the worst of both worlds: economic growth is slowing and inflationary pressures are persisting,&#8221; claimed Chris Zaccarelli, chief investment officer for Independent Advisor Alliance
Zaccarelli commented on the Federal Reserve&#8217;s desire for inflation to begin decreasing persistently, whereas the market is keen on witnessing growth in economic activity and corporate profits. 
Consequently, if neither of these trends aligns with expectations, &#8220;that's going to be bad news for markets.&#8221;
PCE figures are under scrutiny as slowing inflation remains the primary concern for the Federal Reserve. The debate over whether to cut or increase interest rates has intensified, contributing significantly to the recent uncertainty in bond and stock markets, according to Zaccarelli. 
Ted Zhang, associate portfolio manager at Revere Asset Management, observed yields surging amid soft GDP growth and increased PCE prices, with commodities also displaying strength, reminiscent of the stagflation era of the 1970s.
Yields on two-year Treasury notes surpassed the 5% mark, while those on the 30-year benchmark rose to 4.83%. Markets negatively reacted, with both bonds and stocks displaying heavy losses. 
The iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) fell 1%, hitting mid-November 2023 lows, while the S&amp;P 500, as tracked by the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) fell 1.4%. 
Chart: Treasury Yields Rise, Stocks Fall Following Q1 Stagflationary Headwinds
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/25101645/image-215-1024x495.png" alt="" class="wp-image-308965" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/25101645/image-215-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/25101645/image-215-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/25101645/image-215-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/25101645/image-215-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/25101645/image-215.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Ernie Tedeschi, director of economics at The_Budget_Lab and former chief economist at the White House Council of Economic Advisers, offered a distinct perspective. 
The expert highlighted that the GDP miss was primarily due to weaknesses in volatile components, particularly net exports.
 On the other hand, private domestic final purchases, representing &#8220;core GDP&#8221; consisting of consumption and fixed investment, recorded a &#8220;very strong&#8221; growth of 3.1%.
The concerning aspect of this report isn&#8217;t new: quarterly inflation has accelerated. While Tedeschi believes Q1 might overstate the remaining excess inflation—suggesting a trend closer to 2 1/2-3%—it still triggers anxiety.
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"> 
<div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">Real GDP growth came in at 1.6% in Q1, softer than expected. But that appears to be driven by weakness in volatile components, especially net exports. Private domestic final purchases&#8211;&quot;core GDP&quot; made up of consumption &amp; fixed investment&#8211;grew 3.1%, a very strong print. <a href="https://t.co/2hidy6gmb2">pic.twitter.com/2hidy6gmb2</a>
&mdash; Ernie Tedeschi (@ernietedeschi) <a href="https://twitter.com/ernietedeschi/status/1783475269199675428?ref_src=twsrc%5Etfw">April 25, 2024</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></div>
</figure>
Now Read: <a href="https://www.benzinga.com/economics/macro-economic-events/24/04/38410454/treasury-yields-reach-5-month-high-lift-mortgage-rates-expert-warns-federal-debt-">Treasury Yields Reach 5-Month High, Lift Mortgage Rates; Expert Warns &#8216;Federal Debt Blob Is Out Of Control&#8217;</a>

Analyst Color

US Growth Slows In Q1, Yet Inflation Acceleration Signals Stagflation: 'The Worst Possible Outcome For The Fed'

Rising Treasury yields have investors cautious despite positive news <a href="https://www.benzinga.com/calendars/earnings">from the earnings season.</a>
The yield on the long-dated 30-year Treasury bond has surged to 4.79%. It&#8217;s on track to close at the highest level since early November, ahead of crucial economic data on Thursday.
The iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) fell 0.9%, extending its year-to-date drop to 10%. 
Rising yields are propelling the greenback higher, particularly against the low-yielding Japanese yen which tumbled to past 155 per dollar, hitting the lowest level since June 1990.
Tesla Inc. posted lower-than-expected results last quarter, but shares rose 10%. Investors reacted to the automaker&#8217;s pledge to produce more affordable models to broaden the market.
The S&amp;P 500 fell 0.4% by midday trading in New York; the tech-heavy Nasdaq 100 managed to hold steady; and small caps saw wider declines, with the iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>) down 1%. 
Gold remains unchanged, while oil prices edged up by 0.5%, despite the Energy Information Administration revealing a 6.368 million barrel drop in crude oil inventories last week, significantly below market expectations of a 1.6 million barrel increase.
Bitcoin (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/btc/usd">BTC</a>) fell 2.7% to $64,500 amid waning sentiment towards riskier assets. 
<h3 class="wp-block-heading">Wednesday&#8217;s Performance In Major US Indices, ETFs</h3>
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Major Indices</td>
<td>Price</td>
<td>1-day %chg</td>
</tr>
<tr>
<td>Nasdaq 100</td>
<td>17,470.46</td>
<td>0.0%</td>
</tr>
<tr>
<td>Dow Jones</td>
<td>38,334.54</td>
<td>-0.4%</td>
</tr>
<tr>
<td>S&amp;P 500</td>
<td>5,048.09</td>
<td>-0.4%</td>
</tr>
<tr>
<td>Russell 2000</td>
<td>1,983.56</td>
<td>-1.0%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Updated at 12:35 p.m. EDT</figcaption></figure>
The&nbsp;SPDR S&amp;P 500 ETF Trust&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) fell 0.5% to $503.45, the&nbsp;SPDR Dow Jones Industrial Average (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIA#NYSE">DIA</a>) fell 0.4% to $383.43 and the tech-heavy&nbsp;Invesco QQQ Trust&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>) inched 0.1% lower to $424.43, according to&nbsp;<a href="https://pro.benzinga.com/dashboard">Benzinga Pro data</a>.&nbsp;
Sector-wise, the Consumer Discretionary Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLY#NYSE">XLY</a>) outperformed, up 0.3%. The Industrials Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLI#NYSE">XLI</a>) was the major laggard, down 1.5%. 
<h3 class="wp-block-heading">Wednesday&#8217;s Stock Movers</h3>
<ul>
<li>Texas Instruments Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TXN#NASDAQ">TXN</a>) rose 6.5%, after beating both earnings and revenue estimates last quarter. </li>
<li>Other companies reacting to earnings were Steel Dynamics, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/STLD#NASDAQ">STLD</a>) (down 2.5%), Mattel, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MAT#NASDAQ">MAT</a>) (up 3.6%), Baker Hughes Company (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BKR#NASDAQ">BKR</a>) (down nearly 2%), Chubb Ltd. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CB#NYSE">CB</a>), (down over 3%), Old Dominion Freight Line, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ODFL#NASDAQ">ODFL</a>) (down over 10%), Norfolk Southern Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NSC#NYSE">NSC</a>) (down 5%), Boston Scientific Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BSX#NYSE">BSX</a>) (up over 6%), AT&amp;T Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/T#NYSE">T</a>) (up 1.8%), Boeing Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BA#NYSE">BA</a>) (down 1.6%), CME Group Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/CME#NASDAQ">CME</a>) (down 1.4%), General Dynamics Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GD#NYSE">GD</a>) (down 3.2%) and Hilton Worldwide Holdings Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HLT#NYSE">HLT</a>) (up 4.3%). </li>
<li>Notable names reporting after the close are Whirlpool Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/WHR#NYSE">WHR</a>), Western Union Company (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/WU#NYSE">WU</a>), ServiceNow, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NOW#NYSE">NOW</a>), QuantumScape Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/QS#NYSE">QS</a>), O&#8217;Reilly Automotive, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ORLY#NASDAQ">ORLY</a>), Meta Platforms, Meritage Homes Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MTH#NYSE">MTH</a>), Lam Research Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/LRCX#NASDAQ">LRCX</a>), Knight-Swift Transportation Holdings Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KNX#NYSE">KNX</a>), International Business Machines Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IBM#NYSE">IBM</a>), Ford Motor Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/F#NYSE">F</a>) and Chipotle Mexican Grill, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CMG#NYSE">CMG</a>).</li>
</ul>
Now Read: <a href="https://www.benzinga.com/economics/macro-economic-events/24/04/38410454/treasury-yields-reach-5-month-high-lift-mortgage-rates-expert-warns-federal-debt-">Treasury Yields Reach 5-Month High, Lift Mortgage Rates; Expert Warns &#8216;Federal Debt Blob Is Out Of Control&#8217;</a>

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Treasury Yields Rise, Tesla Jumps On Cheaper Model Pledge, Yen Plummets To 34-Year Lows: What's Driving Markets Wednesday?

As Treasury yields continue their upward trajectory, reaching levels not seen since November 2023, the impact on the U.S. mortgage market and potentially for the broader economy is <a href="https://www.benzinga.com/topic/mortgages">becoming increasingly pressing. </a>
On Wednesday, the yield on the 30-year Treasury note climbed 5 basis points, reaching 4.78% by mid-morning in New York, on track to close at its highest level since Nov. 6, 2023. 
Yields on the 10-year benchmark bond also creeped higher to 4.65%, broadly matching the 4.66% hit earlier this month which corresponds with the highest level in five months. 
As such, the performance of bond-related ETFs has been sharply negative year-to-date, with the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) down nearly 10%. 
<h3 class="wp-block-heading">Mortgage Market Feel The Heat</h3>
The rising yields have directly influenced the mortgage sector, where rates have surged to their highest levels since late 2023. 
Joel Kan, the vice president and deputy chief economist at the Mortgage Bankers Association (MBA), noted that the 30-year fixed mortgage rate escalated to 7.24%, marking a third consecutive weekly rise. 
This upswing in rates is cooling mortgage application activity, with the Market Composite Index showing a 2.7% decrease in loan applications.
Kan explained that purchase applications declined, as home buyers delayed their purchase decisions due to strained affordability and low supply.
<h3 class="wp-block-heading">Federal Deficit Concerns</h3>
The burgeoning federal deficit continues to stir unease among investors and market analysts. 
Veteran investor Ed Yardeni expressed concerns about the growing deficit, saying, &#8220;The federal deficit is getting bigger and bigger devouring more and more funds in the capital markets. It hasn&#8217;t killed anyone yet but it might one day if investors decide they don&#8217;t want to keep feeding it. The resulting back up in bond yields could kill the economy and lots of investors.&#8221; 
These comments highlight the tension between government funding needs and the market's capacity to absorb new debt without destabilizing effects.
&#8220;The vertical ascent in the net interest paid by the US federal government is alarming and certainly confirms that the federal debt blob is out of control,&#8221; Yardeni stated.
He suggests adopting a more cautious stance toward the bond and stock markets if a future auction that receives a poor response confirms investor reluctance to continue supporting the burgeoning federal debt.
Read also: <a href="https://www.benzinga.com/general/market-summary/24/04/38391252/were-buying-this-soft-landing-former-fed-governor-blames-government-spending-for-delaying-">&#8216;We&#8217;re Buying This Soft Landing&#8217;: Former Fed Governor Blames Government Spending For Delaying Rate Cuts</a>
<h3 class="wp-block-heading">New Uptrend Well On Track, Watch For Major Golden Cross</h3>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/24103308/image-184-1024x495.png" alt="" class="wp-image-306777" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/24103308/image-184-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/24103308/image-184-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/24103308/image-184-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/24103308/image-184-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/24103308/image-184.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
From a technical standpoint, the monthly chart for 30-year Treasury yields shows a clear ascending channel, connecting the March 2020 and January 2021 higher lows with the October 2022 and October 2023 higher highs. 
This channel has effectively generated a significant shift from the long-term bearish trend that began in the late 1980s. 
This trend suggests a robust upward momentum that could see yields testing several resistance levels in the near future, including the psychological thresholds at 5% and higher.
Traders should be particularly focused on the potential formation of a &#8216;golden cross&#8217; between the 60-month and 120-month moving averages, corresponding to 5 and 10-year averages, respectively. 
Key resistances to watch are represented by 5% (psychological), 5.38% (June 2007 highs), 6% psychological and 6.74% (January 2000 highs). 
Therefore, although yields approaching 5% on longer-dated Treasuries might appear appealing to investors, there remains a possibility for these yields to climb even higher, thus leading to negative returns in bonds.
Read now: <a href="https://www.benzinga.com/etfs/broad-u-s-equity-etfs/24/04/38405106/us-economy-expected-to-grow-2-5-in-q1-not-a-hard-landing-and-hardly-a-soft-one">US Economy Expected To Grow 2.5% In Q1: Not &#8216;A Hard Landing And Hardly A Soft One&#8217;</a>
Photo: Shutterstock

Treasury Yields Reach 5-Month High, Lift Mortgage Rates; Expert Warns 'Federal Debt Blob Is Out Of Control'

Benzinga examined the prospects for<a href="http://www.benzinga.com/trading-ideas"> many investors&#8217; favorite stocks</a> over the last week — here&#8217;s a look at some of our top stories.
Bears ruled Wall Street this week as the S&amp;P 500 endured its worst weekly drop since March 2023, falling over 3% due to rising fears around inflation and monetary policy. The Nasdaq Composite also suffered, dropping 5.5%, its worst week since November 2022 and its fourth consecutive down week, making it the longest losing streak since December 2022.
Meanwhile, Federal Reserve Chair Jerome Powell dismissed any <a href="https://www.benzinga.com/news/large-cap/24/04/38342737/nasdaq-100-notches-worst-day-since-late-2023-worst-week-since-late-2022-as-ai-driven-chipmakers-tu">immediate interest rate cuts</a>, citing slow disinflation, while escalating geopolitical risks further dampened the outlook for tech stocks. Despite these challenges, the Dow managed a marginal gain of 0.01%, marking its first positive week in the last three.
Benzinga provides daily reports on the stocks most popular with investors. Here are a few of this past week&#8217;s most bullish and bearish posts that are worth another look.
<h3 class="wp-block-heading">The Bulls</h3>
<a href="https://www.benzinga.com/markets/cannabis/24/04/38297096/canopy-growth-ceo-at-benzinga-conference-i-dont-think-our-investors-understand-the-value-that-si">&#8220;Canopy Growth CEO At Benzinga Conference: &#8216;I Don&#8217;t Think Our Investors Understand The Value That Sits Inside Of Canopy'&#8221;</a> by <a href="https://www.benzinga.com/author/adam-eckert">Adam Eckert</a>, reports on CEO David Klein&#8216;s statement at the Benzinga Cannabis Capital Conference, asserting that Canopy Growth Corp (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/CGC#NASDAQ">CGC</a>) is undervalued by investors, especially regarding its acquisitions like Wana and its new strategic direction under Canopy USA.
<a href="https://www.benzinga.com/markets/cryptocurrency/24/04/38255536/dogecoin-down-25-in-past-week-but-if-you-get-a-chance-to-buy-it-in-the-high-0-10s-buy-it-s">&#8220;Dogecoin Down 25% In Past Week, But &#8216;If You Get A Chance To Buy It In The High $0.10s, Buy It,&#8217; Says Trader&#8221;</a> by <a href="https://www.benzinga.com/author/khyathi-dalal">Khyathi Dalal</a>, explores how, despite Dogecoin&#8217;s (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/doge/usd">DOGE</a>) 25% plunge, market influencers remain bullish, advocating for purchases during dips as they predict potential price recoveries and a strong altcoin market ahead.
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38273179/draftkings-stock-has-upside-to-street-estimates-analyst-says-sports-betting-play-wi">&#8220;DraftKings Stock Has Upside To Street Estimates, Analyst Says: Sports Betting Play Will &#8216;Benefit From Healthy Growth'&#8221;</a> by <a href="https://www.benzinga.com/author/chris-katje">Chris Katje</a>,&nbsp;describes a Goldman Sachs analyst&#8217;s optimistic outlook on DraftKings Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/DKNG#NASDAQ">DKNG</a>), projecting strong revenue growth and improved profitability due to expanding markets and enhanced unit economics.
For additional bullish calls of the past week, check out the following:
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38320141/rivian-best-positioned-ev-oem-analyst-praises-long-term-outlook-r2-launch-with-shor">Rivian &#8216;Best Positioned EV OEM&#8217;: Analyst Praises Long-Term Outlook, R2 Launch, With Short-Term Caution</a>
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38314733/teslas-autonomous-driving-efforts-win-praise-from-goldman-sachs-wall-street-firm-pr">Tesla&#8217;s Autonomous Driving Efforts Win Praise From Goldman Sachs: Wall Street Firm Projects Long-Term Growth From Robotaxi Services</a>
<a href="https://www.benzinga.com/markets/cryptocurrency/24/04/38341469/happy-bitcoin-halving-day-what-experts-predict-happens-next">Happy Bitcoin Halving Day: What Experts Predict Happens Next</a>
The Bears
<a href="https://www.benzinga.com/news/24/04/38285714/no-more-inventory-discounts-on-tesla-cars-as-ceo-elon-musk-says-sales-system-has-turned-complex-and">&#8220;No More Inventory Discounts On Tesla Cars As CEO Elon Musk Says Sales System Has Turned &#8216;Complex And Inefficient'&#8221;</a> by <a href="https://www.benzinga.com/author/anan-ashraf">Anan Ashraf</a>, explains Elon Musk&#8216;s decision to discontinue Tesla Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TSLA#NASDAQ">TSLA</a>) inventory discounts due to inefficiencies and complexities in the sales process.
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38295633/real-estate-stocks-fall-as-mortgage-rates-rise-to-4-month-highs-inflation-is-provin">&#8220;Real Estate Stocks Fall As Mortgage Rates Rise To 4-Month Highs: &#8216;Inflation Is Proving Tougher To Bring Down'&#8221;</a> by <a href="https://www.benzinga.com/author/piero-cingari">Piero Cingari</a>, describes the drop in real estate stocks like Prologis, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PLD#NYSE">PLD</a>) and EastGroup Properties, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EGP#NYSE">EGP</a>), driven by rising mortgage rates and a pessimistic outlook for housing starts and affordability.
<a href="https://www.benzinga.com/government/24/04/38254776/broadcom-succumbs-to-eu-antitrust-investigation-over-vmware-licensing-prompting-swift-pricing-strate">&#8220;Broadcom Succumbs to EU Antitrust Investigation Over VMware Licensing, Prompting Swift Pricing Strategy Revision&#8221;</a> by <a href="https://www.benzinga.com/author/anusuya-lahiri-0">Anusuya Lahiri</a>, reports that Broadcom Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AVGO#NASDAQ">AVGO</a>) is adjusting VMware&#8217;s pricing in response to an EU antitrust investigation spurred by complaints about unfair licensing practices.
For more bearish takes, be sure to see these posts:
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38303079/most-s-p-500-stocks-no-longer-trade-above-50-day-average-healthy-pullback-or-is-the">Most S&amp;P 500 Stocks No Longer Trade Above 50-Day Average: Healthy Pullback Or Is The Bull Market Over?</a>
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38319509/treasury-yields-head-to-danger-zone-analyst-forecasts-potential-spike-to-5-disorder">Treasury Yields Head To &#8216;Danger Zone&#8217;: Analyst Forecasts Potential Spike To 5%, Disorderly Sell-Off For Markets</a>
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38265256/peter-schiff-challenges-bitcoins-100k-prediction-as-crypto-linked-stocks-languish-i">Peter Schiff Challenges Bitcoin&#8217;s $100K Prediction As Crypto-Linked Stocks Languish In Bear Zone: &#8216;Sell Your Fool&#8217;s Gold And Buy The Real Thing&#8217;</a>
Keep up with all the latest breaking news and trading ideas by following<a href="https://twitter.com/Benzinga"> Benzinga</a><a href="http://twitter.com/Benzinga"> on Twitter</a>.
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image generated using artificial intelligence via Midjourney.

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Benzinga Bulls And Bears: Tesla, DraftKings, Broadcom And Trader Says Buy Dogecoin In High 10 Cents If You Get A Chance

International Monetary Fund (IMF) deputy chief Gita Gopinath raised concerns about the United States&#8217; burgeoning public debt, emphasizing the urgency of reducing the federal deficit from its <a href="https://www.benzinga.com/economics/macro-economic-events/24/04/38292094/imf-raises-concerns-over-us-debt-something-will-have-to-give">current 7% of GDP.</a>
&#8220;The U.S. is running [a] very large deficit for a country with a strong demand, and they still have to deal with the last mile to bring inflation down,&#8221; Gita Gopinath, said Friday in a Bloomberg interview during the IMF Spring Meetings.
&#8220;We can't have a deficit of 7% of GDP, it needs to be lower,&#8221; Gopinath added.
<h3 class="wp-block-heading">The US Government Has A Fiscal Challenge: The Figures Don't Lie</h3>
The U.S. government fiscal deficit ballooned to 8.8% of GDP in 2023, marking a considerable increase from the previous year's 4.1%. This surge has been largely attributed to a significant fall in income tax revenues paired with escalated government expenditure.
Peering into the future, the IMF's Fiscal Monitor publication forecasted only a minor contraction of the U.S. budget deficit to 6.6% of GDP in 2024. 
However, the relief appears short-lived as estimates indicate a rebound to 7.1% in 2025, with the deficit remaining constantly above 6% through 2029. 
That signals a worrisome upward trend for the U.S. government debt-to-GDP ratio, which is expected to climb from 122% to 134% by 2029, according to the IMF projections. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Year</td>
<td>Government Deficit (As % of GDP)</td>
<td>Government Debt As % of GDP</td>
</tr>
<tr>
<td>2023</td>
<td>-8.8</td>
<td>122.1</td>
</tr>
<tr>
<td>2024</td>
<td>-6.5</td>
<td>123.3</td>
</tr>
<tr>
<td>2025</td>
<td>-7.1</td>
<td>126.6</td>
</tr>
<tr>
<td>2026</td>
<td>-6.6</td>
<td>128.9</td>
</tr>
<tr>
<td>2027</td>
<td>-6.2</td>
<td>130.7</td>
</tr>
<tr>
<td>2028</td>
<td>-6.4</td>
<td>132.6</td>
</tr>
<tr>
<td>2029</td>
<td>-6</td>
<td>133.9</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Data: IMF Fiscal Monitor – April 2024</figcaption></figure>
<h3 class="wp-block-heading">The Ripple Effect Of US Debt Dynamics</h3>
Gopinath cautioned that if U.S. fiscal challenges are left unchecked, they risk threatening global economic stability. 
&#8220;That has consequences for debt servicing in the U.S. and spillovers to the rest of the world.&#8221; A central point of Gopinath&#8217;s concern is the ‘&#8221;crowding out&#8221; effect, where U.S. borrowing could heighten borrowing costs globally. 
&#8220;When you have debt issues in the U.S., that can crowd out the borrowing from other countries, as their cost of borrowing will increase by much more.&#8221;
Furthermore, Gopinath noted that while the U.S. does not currently face a debt sustainability crisis, the heavy borrowing is pushing interest rates higher, which reverberates through global financial systems and affects international corporations.
<h3 class="wp-block-heading">Not Much Relief Coming From Lower Interest Rates</h3>
Potentially lower interest rates are unlikely to materially shift the U.S. fiscal problems. 
&#8220;We are expecting interest rates to come down, but bringing inflation back to target is going to take a little longer,&#8221; Gopinath said. 
Addressing a question on the possibility of interest rates returning to pre-pandemic levels, Gopinath's response was clear: &#8220;That doesn't seem to be the case.&#8221;
Yields on the 2-year Treasury note, often seen as a barometer for Federal Reserve rate moves, hit the 5% mark on Friday, reaching peaks not seen since mid-November 2023, and reflecting a dramatic shift in investor expectations regarding future Fed rate cuts.
Meanwhile, the market performance of U.S. Treasury bonds has been negative this year. Notably, the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) has witnessed a 9% retreat since the year began. 
Read now: <a href="https://www.benzinga.com/general/macro-notification/24/04/38325320/small-group-of-hedge-funds-wields-dominance-in-us-treasury-market-a-concentration-of-v">Small Group Of Hedge Funds Wields Dominance In US Treasury Market: &#8216;A Concentration Of Vulnerability Has Built Up,&#8217; IMF Warns</a>
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Specialty ETFs

Is The US National Debt Unsustainable? 'We Can't Have A Deficit Of 7% Of The GDP'

The International Monetary Fund (IMF) has raised concerns about a small number of hedge funds that now hold significant control over the <a href="https://www.benzinga.com/topic/treasuries">U.S. Treasury futures market. </a>
&#8220;A concentration of vulnerability has built up, as a handful of highly leveraged funds account for most of the short positions in Treasury futures,&#8221; the IMF&#8217;s April 2024 Global Financial Stability (GFS) report states. 
This concentration of short positions by highly leveraged funds could pose systemic threats to the financial stability of not just the U.S., but the global economy, according to the Washington-based institution. 
<h3 class="wp-block-heading">Increasing Bets On Treasury Futures By Hedge Funds</h3>
Leveraged hedge funds have ramped up their short positions in U.S. Treasury futures, capitalizing on the basis trade, which involves exploiting the price discrepancies between cash Treasuries and their futures counterparts. 
These funds use borrowed money from the repurchase-agreement (repo) market to increase their potential returns. 
The IMF warns that the scale of these bets has grown large enough to spark concerns among financial stability observers.
&#8220;Some of these funds may have become systemically important to the Treasury and repo markets, and stresses they face could affect the broader financial system,&#8221; the IMF stated. 
<h3 class="wp-block-heading">Too Big To Fail?</h3>
Essentially, the report suggests that certain funds have become so crucial to the Treasury and repo markets that they might now be considered too big to fail.
Any significant liquidity problems they encounter could ripple through the broader financial system, causing widespread instability.
The concentration of leverage among these funds is stark. Nearly half of all two-year Treasury futures positions are held by fewer than eight traders. For longer maturities like five and ten years, just eight hedge funds control about 30% of the market.
In August last year, hedge fund manager Bill Ackman made headlines by initiating a short position on U.S. 30-year Treasuries, anticipating <a href="https://www.benzinga.com/government/23/08/33547572/hedge-fund-guru-bill-ackman-bets-against-us-treasuries-expects-30-year-yields-to-surge-to-5-5">soaring U.S. budget deficits. </a> This move netted him over $200 million when he closed <a href="https://www.benzinga.com/general/hedge-funds/23/10/35375749/bill-ackman-exits-treasury-bond-short-position-warns-economy-slowing-faster-than-recent-data-">the position in October.</a>
So far in 2024, U.S. Treasury bonds have underperformed. The iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) has dropped almost 9% since the beginning of the year, and the Vanguard Extended Duration Treasury ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EDV#NYSE">EDV</a>) has seen a decline exceeding 12%.
<h3 class="wp-block-heading">US Debt-To-GDP Ratio Set To Rise To 134% By 2029</h3>
It remains uncertain whether the hedge funds&#8217; substantial short positions are in part a bet against U.S. fiscal health, anticipating that yields will remain elevated due to ongoing loose fiscal policies. 
The IMF&#8217;s &#8216;Fiscal Monitor&#8217; suggests that increasing public debt, primarily in China and the United States, coupled with tightening monetary policies, are contributing to higher long-term government bond yields and their volatility in the U.S.
In 2023, the U.S. general government fiscal deficit expanded dramatically to 8.8% of GDP, up from 4.1% the previous year, driven by a sharp decline in income tax revenues and increased spending. The deficit is expected to slightly decrease to 6.6% of GDP in 2024 but will rise again in 2025.
The IMF projects that the U.S. debt-to-GDP ratio will continuously climb from 122% in 2023 to nearly 134% by 2029.
"Public gross financing needs will remain at levels higher than those before the pandemic over the medium term based on high existing debt burdens and persistent fiscal deficits. China and the United States have large gross financing needs of more than 25 percent of GDP in the near term,&#8221; the IMF wrote. 
The IMF&#8217;s forecasts suggest that the U.S. Treasury will need to issue a substantial amount of bonds to refinance maturing debt and cover the spiraling deficit, a reality that hedge funds are keenly exploiting.
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Year</td>
<td>Government Deficit (As % of GDP)</td>
<td>Government Debt As % of GDP</td>
</tr>
<tr>
<td>2023</td>
<td>-8.8</td>
<td>122.1</td>
</tr>
<tr>
<td>2024</td>
<td>-6.5</td>
<td>123.3</td>
</tr>
<tr>
<td>2025</td>
<td>-7.1</td>
<td>126.6</td>
</tr>
<tr>
<td>2026</td>
<td>-6.6</td>
<td>128.9</td>
</tr>
<tr>
<td>2027</td>
<td>-6.2</td>
<td>130.7</td>
</tr>
<tr>
<td>2028</td>
<td>-6.4</td>
<td>132.6</td>
</tr>
<tr>
<td>2029</td>
<td>-6</td>
<td>133.9</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Data: IMF Fiscal Monitor – April 2024</figcaption></figure>
Read now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38319509/treasury-yields-head-to-danger-zone-analyst-forecasts-potential-spike-to-5-disorder">Treasury Yields Head To &#8216;Danger Zone&#8217;: Analyst Forecasts Potential Spike To 5%, Disorderly Sell-Off For Markets</a>
Photo: Shutterstock

Short Sellers

Financing

Futures

Hedge Funds

Small Group Of Hedge Funds Wields Dominance In US Treasury Market: 'A Concentration Of Vulnerability Has Built Up,' IMF Warns

Yields on the 10-year Treasury note have ascended to a striking 4.70% this month, the highest mark since early November 2023 amid a toxic mix of higher inflation, a stubbornly resilient economy and revised expectations around <a href="https://www.benzinga.com/topic/interest-rates">Federal Reserve rate cuts.</a>
Adding to the unease, Fed Chair Jerome Powell recently indicated the latest economic data does not bolster confidence that inflation will converge towards <a href="https://www.benzinga.com/etfs/broad-u-s-equity-etfs/24/04/38278182/powell-delays-fed-rate-cuts-we-need-greater-confidence-in-inflation-2-year-yields-spik">the Fed&#8217;s 2% target soon.</a>
The bond market strain is also reflected in the performance of related instruments, such as the US Treasury 10 Year Note ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UTEN#NYSE">UTEN</a>), which is down by 2.9% for April, making it the most challenging month since September 2023. 
Longer-dated Treasury exchange-traded funds (ETFs), such as the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>), fell even more, down 5.6% month to date. 
<h1 class="wp-block-heading">Chart: 10-Year Treasury Yields Eye The 5% Red Line</h1>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/18105556/image-121-1024x495.png" alt="" class="wp-image-298169" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/18105556/image-121-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/18105556/image-121-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/18105556/image-121-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/18105556/image-121-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/18105556/image-121.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h1 class="wp-block-heading">Analysts Rethink Fed&#8217;s Next Moves: Vanguard Issues Warnings When Yields Hit 5%</h1>
The landscape of Fed policy expectations is being redrawn by analysts who, until recently, had not anticipated such aggressive shifts in Treasury yields. Few had foreseen yields approaching levels that could destabilize the market. 
Yet, Vanguard's head of international rates Ales Koutny offered a stark warning: &#8220;We are in a danger zone right now.&#8221; 
Koutny believed that surpassing the 4.75% yield threshold could trigger a severe sell-off, potentially driving rates to or beyond 5%.
As recently reported by <a href="https://www.bloomberg.com/news/articles/2024-04-18/treasuries-vanguard-warns-10-year-yields-risk-spiking-back-to-5?srnd=homepage-americas&amp;sref=TBDibEcD">Bloomberg</a>, investors flocked to Treasuries late last year, anticipating a quick easing of Federal Reserve policies. However, resilient economic data from the U.S. has dampened these expectations, turning the tide against market optimists.
Koutny revealed, &#8220;We still think that there's a residual long position left over.&#8221; The lack of orderly adjustment in these positions could precipitate a chaotic market selloff, risking a yield spike to critical levels.
Despite the prevailing negative market sentiment, the current high yields have attracted some opportunistic buying. 
The latest data from JPMorgan Chase &amp; Co. indicates a significant shift in investor positioning towards Treasuries, marking the first net long stance since March. 
The robust demand was further evidenced by a successful 20-year Treasury auction, closing at yields slightly lower than anticipated, suggesting underlying market confidence in Treasury securities despite broader concerns.
Read Now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38297897/fund-managers-are-the-most-optimistic-since-2022-bull-sentiment-not-quite-at-close-">Fund Managers Are The Most Optimistic Since 2022: &#8216;Bull Sentiment Not Quite At Close-Your-Eyes-And-Sell Levels&#8217;</a>
Photo: Shutterstock

Treasury Yields Head To 'Danger Zone': Analyst Forecasts Potential Spike To 5%, Disorderly Sell-Off For Markets

A sentiment of risk aversion looms over the markets during Wednesday&#8217;s trading session, triggering midday losses across the board in stocks and cryptocurrencies and prompting a flight towards bonds, as investor confidence remains dampened by<a href="https://www.benzinga.com/topic/macro-economic-events"> geopolitical and economic risks.</a>
The situation in the Middle East remains highly uncertain, with Israeli Prime Minister Benjamin Netanyahu stating that despite advice from allies to avoid a retaliation against Iran, Israel will make its own decisions on security.
Investors also parsed through the latest remarks from Fed Chair Jerome Powell, which officially dashed hopes for imminent rate cuts amid a lack of confidence about disinflation.
The S&amp;P 500 declined by 0.5% by 1.15 p.m. EDT, while the tech-heavy Nasdaq 100 underperforming, down by 1.2%. Semiconductors were among the weakest-performing industries, with the VanEck Semiconductors ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SMH#NYSE">SMH</a>) falling by 2.5%, on track to close at its lowest level in nearly two months.
Investors sought refuge in Treasuries for liquidity, causing yields to drop by 8 basis points in the 10-year tenor, while the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) rallied by 1%. Gold softened by 0.5%, while silver managed to inch up by 0.8%.
Bitcoin (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/btc/usd">BTC</a>) faced significant downward pressure, with the largest cryptocurrency plummeting by 5.2% and hitting an intraday low of $59,650, now down 18% since its peak in March.
<h3 class="wp-block-heading">Wednesday&#8217;s Performance In Major US Indices, ETFs</h3>
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Major Indices</td>
<td>Price</td>
<td>1-day Chg %</td>
</tr>
<tr>
<td>Dow Jones</td>
<td>37,743.82</td>
<td>-0.1%</td>
</tr>
<tr>
<td>Russell 2000</td>
<td>1,963.08</td>
<td>-0.5%</td>
</tr>
<tr>
<td>S&amp;P 500</td>
<td>5,025.59</td>
<td>-0.5%</td>
</tr>
<tr>
<td>Nasdaq 100</td>
<td>17,524.58</td>
<td>-1.1%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Updated at 1:15 p.m. EDT</figcaption></figure>
The&nbsp;SPDR S&amp;P 500 ETF Trust&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) fell 0.5% to $501.05, the&nbsp;SPDR Dow Jones Industrial Average (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIA#NYSE">DIA</a>) inched 0.1% lower to $377.69 and the tech-heavy&nbsp;Invesco QQQ Trust&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>) fell 1.1% to $426.78, according to&nbsp;<a href="https://pro.benzinga.com/dashboard">Benzinga Pro data</a>.&nbsp;
Sector-wise, the Utilities Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLU#NYSE">XLU</a>) outperformed, up 1.4%. The Technology Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLK#NYSE">XLK</a>) was the major laggard, down 1%. 
<h3 class="wp-block-heading">Wednesday&#8217;s Stock Movers</h3>
<ul>
<li>United Airlines Holdings, Inc.&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/UAL#NASDAQ">UAL</a>) rose over 14%, amid stronger-than-expected financial results last quarter. Peers such as American Airlines Group Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAL#NASDAQ">AAL</a>), Delta Airlines Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DAL#NYSE">DAL</a>) rose 4.5% and 2.5%, respectively. </li>
<li>Other companies reacting to earnings reports were J.B. Hunt Transport Services, Inc.&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/JBHT#NASDAQ">JBHT</a>), down 8%, Abbott Laboratories&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ABT#NYSE">ABT</a>), down 2.5%, ASML Holding N.V. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ASML#NASDAQ">ASML</a>), down 7.5%, First Horizon Corporation&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FHN#NYSE">FHN</a>), up 2.2%, Travelers Companies, Inc.&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TRV#NYSE">TRV</a>), down nearly 8%, Prologis Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PLD#NYSE">PLD</a>), down 6.5%, and U.S. Bancorp&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USB#NYSE">USB</a>), down 4%. </li>
<li>GE Vernova Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GEV#NYSE">GEV</a>) rallied 6% after BNP Paribas initiated coverage with an Outperform rating and $177 price target. </li>
<li>Notable names reporting after the close are CSX Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/CSX#NASDAQ">CSX</a>), Alcoa Corporation&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AA#NYSE">AA</a>), Discover Financial Services&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DFS#NYSE">DFS</a>) and Las Vegas Sands Corp.&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LVS#NYSE">LVS</a>).</li>
</ul>
Read now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38297897/fund-managers-are-the-most-optimistic-since-2022-bull-sentiment-not-quite-at-close-">Fund Managers Are The Most Optimistic Since 2022: &#8216;Bull Sentiment Not Quite At Close-Your-Eyes-And-Sell Levels&#8217;</a>
Image generated using artificial intelligence via Midjourney.

Analyst Ratings

ASML

JBHT

Stocks Fall As Geopolitics, Economic Worries Spook Investors, Chipmakers Sell Off, Bitcoin Tumbles To $60,000: What's Driving Markets Wednesday?

Investors remain on edge as geopolitics continue to shape market trends, with Israel mulling a response to Iran while the U.S. and key allies explore <a href="https://www.benzinga.com/news/24/04/38264304/middle-east-tensions-mount-as-israel-considers-retaliation-after-irans-direct-attack">further sanctions against Tehran.</a>
U.S. major averages display mixed performances as of midday trading Tuesday. The S&amp;P 500 holds steady at 5,200 points, while blue-chip stocks outperform the broader market, and small caps experience some declines.
In its April World Economic Outlook, the International Monetary Fund raised growth projections for the U.S. economy, while eyeing the possibility of Federal Reserve rate cuts this year as inflation declines. Yet, an escalation in the Middle East could complicate the picture, pushing oil and inflation higher and forcing central <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38272906/imf-expects-lower-interest-rates-unless-middle-east-conflict-escalates-there-will-b">banks to tighten again. </a>
Treasury yields continue to kick higher, with the yield on the 10-year Treasury bond reaching 4.65%. Bond-related ETFs declined further, with the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) down 0.5%. 
Despite the uptick in yields and a stronger dollar, gold continues to showcase an impressive strength, with the yellow metal up 0.3% to $2,390 per ounce, on track for a record-high close. 
Oil prices were slightly softer, down 0.4%. Bitcoin (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/btc/usd">BTC</a>) is down 2.5% to $61,900, marking a 15% drop since last week&#8217;s high. 
<h1 class="wp-block-heading">Tuesday&#8217;s Performance In Major U.S. Indices, ETFs</h1>
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Major Indices</td>
<td>Price</td>
<td>1-day %chg</td>
</tr>
<tr>
<td>Dow Jones</td>
<td>37,910.28</td>
<td>0.5%</td>
</tr>
<tr>
<td>Nasdaq 100</td>
<td>17,759.96</td>
<td>0.3%</td>
</tr>
<tr>
<td>S&amp;P 500</td>
<td>5,066.92</td>
<td>0.1%</td>
</tr>
<tr>
<td>Russell 2000</td>
<td>195.34</td>
<td>-0.2%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Updated at 12:30 p.m. EDT</figcaption></figure>
The&nbsp;SPDR S&amp;P 500 ETF Trust&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) held steady at $504.71, the&nbsp;SPDR Dow Jones Industrial Average (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIA#NYSE">DIA</a>) rose 0.4% to $379.06 and the tech-heavy&nbsp;Invesco QQQ Trust&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>) held steady at $431.91, according to&nbsp;<a href="https://pro.benzinga.com/dashboard">Benzinga Pro data</a>.&nbsp;
Sector-wise, the Health Care Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLV#NYSE">XLV</a>) outperformed, up 0.4%. The Energy Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLE#NYSE">XLE</a>) was the major laggard, down 0.9%. 
<h1 class="wp-block-heading">Tuesday&#8217;s Stock Movers</h1>
<ul>
<li>Tesla, Inc, (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TSLA#NASDAQ">TSLA</a>) fell more than 2.8%, on track to close at the lowest level in a year, after analysts interpreted the recent layoff announcement as a negative sign for the company&#8217;s outlook. </li>
<li>Companies reacting to earnings were Bank of America Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BAC#NYSE">BAC</a>), down 3.3%; Morgan Stanley (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MS#NYSE">MS</a>), up 3.4%; Northern Trust Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NTRS#NYSE">NTRS</a>), down 4%; PNC Financial Services Group, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PNC#NYSE">PNC</a>), down 1.9%; Jonson &amp; Johnson (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNJ#NYSE">JNJ</a>), down 2.4%; and UnitedHealth Group Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UNH#NYSE">UNH</a>), up over 6%. </li>
<li>Skillsoft Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SKIL#NASDAQ">SKIL</a>) fell nearly 40%, after a revenue miss and departure of its CEO. </li>
<li>Hawaiian Electric Industries, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HE#NYSE">HE</a>) fell 18%, falling below last year&#8217;s lows, after the company announced readiness to implement rolling blackouts owing to reduced wind and solar power generation, along with the temporary outage of several large generators.</li>
<li>Notable names reporting earnings after the close are J.B. Hunt Transport Services, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/JBHT#NASDAQ">JBHT</a>), United Airlines Holdings, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/UAL#NASDAQ">UAL</a>) and Interactive Brokers Group Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IBKR#NYSE">IBKR</a>). </li>
</ul>
Read Now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38274726/homebuilder-stocks-tumble-as-housing-starts-fall-by-14-7-a-poor-time-to-buy-a-home-">Homebuilder Stocks Tumble As Housing Starts Fall By 14.7%: &#8216;A Poor Time To Buy A Home,&#8217; Says Economist</a>
Photo: Shutterstock

IBKR

NTRS

SKIL

Stocks Grapple With Geopolitical Pressures, Gold Eyes $2,400, Bitcoin Falls Below $62,000: What's Driving Markets Tuesday?

Iran launched a barrage of explosive drones and missiles towards Israel late on Saturday in its first direct attack on Israeli soil, prompting concerns of a significant escalation. Sirens blared in Israel, as reported by Reuters, and distant booming sounds were heard, likely from the interception of the drones.
Israel said it identified 300 &quot;threats of various types&quot; and eliminated &quot;99%&quot; of those bound for Israeli soil, according to an update from an Israel Defense Forces spokesperson, as quoted on CNBC. Iran&#39;s Revolutionary Guards seized a cargo ship in the Strait of Hormuz on Saturday, saying the vessel, associated with Israel, prompted heightened alert levels due to the possibility of a direct Iranian attack,
This could escalate a decades-old standoff between the two regional adversaries. Notably, the Gaza war between Israel and Hamas, now entering its seventh month, has heightened tensions in the region, extending to conflicts with Lebanon and Syria. Additionally, long-range attacks targeting Israeli interests have originated from Yemen and Iraq.
<h3>Market Impact</h3>
Investors are likely to take this clash seriously and rush toward fear-induced selling. The sudden rise of chaos in the market brightened the appeal for safe haven assets. Volatility ETFs which track the implied volatility of the market also surged thanks to the massacre in the stock market. iPath Series B S&amp;P 500 VIX Short-Term Futures ETN (BATS: <a class="ticker" href="https://www.benzinga.com/stock/vxx#BATS">VXX</a>) has added about 4.2% past week and rose 8.8% on Friday and advanced about 1% after hours on Apr 12.
Below, we highlight a few of the biggest gainers from the latest sell-off in the stock market. Also, these ETFs may continue to shine should tensions persist in the global economy in the near term.
<h3>Gold</h3>
Gold is often viewed as a hedge against market risk. The metal has seen some strength lately thanks to this market turmoil. Gold bullion ETF SPDR Gold Trust (ARCA:GLD) has gained 0.4% in the past five days. It added 0.14% in after hours on Apr 12.
<h3>Long-Term U.S. Treasury</h3>
U.S. 10-year benchmark treasury yield slumped to 4.50% on Apr 12, 2024, down from 4.56% recorded on Apr 11 despite talks of higher-for-longer rates due to rise in volatility in the markets. Notably, U.S. Treasuries are also perceived as risk-free asset class which is why iShares Barclays 20 Year Treasury Bond Fund (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tlt#NASDAQ">TLT</a>) and iShares Barclays 7-10 Year Treasury Bond Fund (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/ief#NASDAQ">IEF</a>) added about 0.5% and 0.4% on Apr 12, 2024.
<h3>U.S. Dollar</h3>
The U.S. dollar is often viewed as a safe haven currency due to their strong liquidity and stable political systems. With the Fed likely to keep rates higher for longer due to sticky inflation, the U.S. dollar is likely to remain strong over the medium term. Invesco DB US Dollar Index Bullish Fund (ARCA:UUP) can thus be played here.
<h3>Bottom Line</h3>
Although we do not expect this bearish trend to continue for long especially in the United States, which has a strong trend underneath, the upheaval in the stock market may persist for a week or so courtesy of the gloomy global backdrop and an oil price rally (due to crisis in the oil-rich Middle East). However, as the earnings season unfolds, this fluffy market should take a solid shape and decide on the fate of several asset classes and sectors.
<a href="https://www.zacks.com/stock/news/2255601/3-safe-haven-etfs-to-gain-on-middle-east-crisis?cid=CS-BENZ-FT-etf_news_and_commentary-2255601">To read this article on Zacks.com click here.</a>

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To gain an edge, this is what you need to know today.
<img alt="" src="https://thearorareport.com/wp-content/uploads/2024/04/2024-04-16_07h50_47.png" style="height:389px; width:624px" />
<h3>Extraordinary Move In Treasuries</h3>
Please <a href="https://thearorareport.com/stock-market-chart-analysis-yields-rise-israel-iran-tlt-mc-04162024">click here</a> for an enlarged chart of 20+ year Treasury bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tlt#NASDAQ">TLT</a>).
Note the following:
<ul>
<li>The chart shows that TLT has fallen below the support/resistance zone.&nbsp;This prior support zone has now become a resistance zone.</li>
<li>The chart shows that after a breakdown below the zone, Treasuries have continued to fall.</li>
<li>The chart shows a downward sloping trendline and a significant move lower away from the trendline.</li>
<li>The chart shows that the down move is on heavy volume.&nbsp;This indicates conviction.</li>
<li>Historically, at a time of geopolitical tension, money rushes into U.S. Treasuries, and U.S. Treasuries rocket up.&nbsp;Based on history, on Iran attacking Israel, U.S. Treasuries should have moved up.&nbsp;But as the chart shows, Treasuries have continued to move down.</li>
<li>In The Arora Report analysis, Treasuries moving down in spite of the Iranian attack on Israel is quite extraordinary.&nbsp;</li>
<li>Prudent investors pay attention when something extraordinary happens in the markets.&nbsp;&nbsp;</li>
<li>Lower Treasuries mean lower stock valuations.&nbsp;All investors should fully grasp this point.&nbsp;&nbsp;</li>
<li>As is their pattern, the momo crowd is oblivious to this extraordinary development and is buying stocks.&nbsp;The momo crowd&rsquo;s buy the dip without analysis mentality is on full display.</li>
<li>Fed Chair Powell has been itching to cut interest rates.&nbsp;Clearly, the bond market is not only defying him, but it is telling him he is wrong. Powell will be participating in a Q&amp;A.&nbsp;We will be paying close attention to what he says.</li>
<li>San Francisco Fed President Mary Daly is saying there is no urgency to cut rates.</li>
<li>Wall Street seems to be coming around.&nbsp;A major bank is accepting the real risk of a rate hike.&nbsp;Of course, members and readers of The Arora Report, <a href="https://blog.thearorareport.com/stock-market-032924/">already knew in advance</a> that the data could force the Fed&rsquo;s hand to raise rates at a time when everyone expects rate cuts.</li>
<li>Lower Treasury bonds mean higher yields in the U.S.&nbsp;Higher yields mean a higher dollar.</li>
<li>Central Banks of China, India, and Indonesia intervened in the forex market to defend their currencies against the dollar.&nbsp;&nbsp;</li>
</ul>
<h3>International Monetary Fund (IMF)</h3>
IMF is warning the U.S. on excessive spending and ballooning debt.&nbsp;IMF is also increasing its forecast of global growth in 2024 to 3.2% from 3.1%.
<h3>Housing Slows</h3>
After a breakneck pace, new home construction is finally slowing. Here are the details:
<ul>
<li>March housing starts came at 1.321M vs. 1.485M consensus.</li>
<li>March building permits came at 1.458M vs. 1.518M consensus.</li>
</ul>
<h3>China &ndash; Beneath The Surface</h3>
China GDP growth beat the consensus.&nbsp;In The Arora Report analysis, looking beneath the surface, there is weakness. Here are the details:
<ul>
<li>GDP came at 5.3% year-over-year vs. 4.8% consensus.</li>
<li>March Industrial Production came at 4.5% year-over-year vs. 6.0% consensus.</li>
<li>March Retail Sales came at 3.1% year-over-year vs. 5.1% consensus.</li>
</ul>
<h3>Magnificent Seven Money Flows</h3>
In the early trade, money flows are positive in NVIDIA Corp (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nvda#NASDAQ">NVDA</a>) and Microsoft Corp (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/msft#NASDAQ">MSFT</a>).
In the early trade, money flows are neutral in Amazon.com, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amzn#NASDAQ">AMZN</a>), Apple Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/aapl#NASDAQ">AAPL</a>), Alphabet Inc Class C (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/goog#NASDAQ">GOOG</a>), and Meta Platforms Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/meta#NASDAQ">META</a>).
In the early trade, money flows are negative in Tesla Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tsla#NASDAQ">TSLA</a>).
In the early trade, money flows are mixed in SPDR S&amp;P 500 ETF Trust (ARCA:SPY) and Invesco QQQ Trust Series 1 (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqq#NASDAQ">QQQ</a>).
<h3>Momo Crowd And Smart Money In Stocks</h3>
The momo crowd is buying stocks in the early trade.&nbsp;Smart money is inactive in the early trade.
<h3>Gold</h3>
The momo crowd is selling gold in the early trade.&nbsp;Smart money is inactive in the early trade.
For longer-term, please see gold and silver ratings.
The most popular ETF for gold is SPDR Gold Trust (ARCA:GLD).&nbsp;The most popular ETF for silver is iShares Silver Trust (ARCA:SLV).
<h3>Oil</h3>
The momo crowd is selling oil in the early trade. Smart money is inactive in the early trade.
For longer-term, please see oil ratings.
The most popular ETF for oil is United States Oil ETF (ARCA:USO).
<h3>Bitcoin</h3>
Bitcoin (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/btc/usd">BTC</a>) halving is projected to be on April 19.&nbsp; So far, whales have been very successful in using the halving as a pump to get mom and pop excited to buy bitcoin over $70,000 while whales themselves took profits.
Bitcoin is trading around $63,000 as of this writing.&nbsp;&nbsp;
<h3>Protection Band And What To Do Now</h3>
It is important for investors to look ahead and not in the rearview mirror.
Based on individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. This is a good way to protect yourself and participate in the upside at the same time.
You can determine your protection bands by adding cash to hedges.&nbsp;The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.&nbsp; If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.&nbsp;When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.&nbsp; High beta stocks are the ones that move more than the market.
<h3>Traditional 60/40 Portfolio</h3>
Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.
Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of seven year duration or less.&nbsp;Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.
The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever<a href="https://thearorareport.com/generate-wealth-newsletter"> </a><a href="https://thearorareport.com/generate-wealth-newsletter">Generate Wealth Newsletter</a>.
This article is from an unpaid external contributor. It does not represent Benzinga&#39;s reporting and has not been edited for content or accuracy.

Asia

Forex

Prudent Investors Pay Attention To The Extraordinary Treasuries' Move – Momo Obliviously Buys Stocks

U.S. Treasury yields have reached their highest levels since mid-November 2023, driven by a mix of economic resilience, persistent fiscal spending <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38186082/this-puts-the-fed-in-quite-a-tricky-position-7-economists-weigh-in-on-march-inflati">and resuming inflationary pressures. </a>
These factors are steering the market&#8217;s expectations away from earlier predictions of imminent Federal Reserve rate cuts, significantly impacting the cost of issuing U.S. government debt.
<h1 class="wp-block-heading">Treasury Bond ETFs Fall To Mid-November 2023 Lows</h1>
On Monday, the yield on the 10-year Treasury note hit 4.61%, a peak not observed since Nov. 14, 2023. 
This represents a substantial increase of approximately 40 basis points since the beginning of the month.
Additionally, the daily chart for the 10-year Treasury yield shows the 50-day and 200-day moving averages have created a &#8220;golden cross&#8221; pattern, signaling the confirmation of an uptrend and the possibility of further increases, with the next resistance level now projected at 5%.
Concurrently, bond ETFs have experienced notable declines. The iShares 7-10 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/IEF#NASDAQ">IEF</a>) fell to its lowest level since Nov. 13, 2023, reflecting a 5.6% decrease since its February 2024 high. 
The iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) has seen an even steeper drop, falling more than 11% from its January peak.
<h1 class="wp-block-heading">Chart: US 10-Year Yields For Golden-Cross Pattern</h1>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/15163420/image-80-1024x495.png" alt="" class="wp-image-292683" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/15163420/image-80-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/15163420/image-80-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/15163420/image-80-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/15163420/image-80-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/15163420/image-80.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h1 class="wp-block-heading">Hot Economic Data Fuels Speculation On Fewer And Delayed Fed Rate Cuts</h1>
Recent robust U.S. economic indicators have contributed to a shift in market expectations regarding the Federal Reserve&#8217;s actions. 
March 2024 saw U.S. retail sales jump unexpectedly by 0.7%, against <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38253316/us-retail-sales-boom-well-above-forecasts-rise-4-on-the-year-blowout-report-economi">a forecast of 0.3%</a>. This comes on the heels of higher-than-expected inflation figures and a tighter-than-expected jobs report earlier in the month.
Originally, markets had anticipated the Fed to start reducing rates in June 2024, with a total of three cuts throughout the year. However, current speculations suggest the Fed might only implement a single rate cut this year. 
Traders now see only a 20% probability of a June rate cut and the anticipated overall easing for 2024 stands at around 40 basis points, indicating fewer than two quarter-percentage-point cuts.
<h1 class="wp-block-heading">Analysts Reassess Fed&#8217;s Rate Path: UBS Sees Fed Hiking Again</h1>
Analysts have quickly adjusted their forecasts on Fed interest rates in response to this shift in economic signals. 
A significant caution came from UBS Group AG strategists Jonathan Pingle and Bhanu Baweja, who highlighted the risk of inflation not decreasing to the Fed&#8217;s target, potentially necessitating a return to rate hikes and triggering a significant downturn in bonds and stocks.
As reported by <a href="https://www.bloomberg.com/news/articles/2024-04-15/fed-hiking-rates-to-6-5-is-real-risk-for-ubs-strategists?srnd=homepage-americas&amp;sref=TBDibEcD">Bloomberg</a>, they warned of a possible return to rate hikes if inflation remains above 2.5%, predicting that the Federal Funds rate could reach 6.5% by mid-next year.
The UBS team described a &#8220;no-landing scenario&#8221; where further rate hikes could lead to a significant flattening of the U.S. Treasury curve and a potential 10%-15% decline in stock market values. 
They also forecasted wider credit spreads and a considerable adjustment in market multiples, cautioning that investors are beginning to worry about an overheated economy that could maintain high inflation level.
Photo: Funtap on Shutterstock

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