2024-02-07 10:25:23 ET
Summary
- Fed officials are using hawkish rhetoric to dampen investor enthusiasm for risk assets and delay rate cuts.
- So far, 81% of companies have beaten earnings estimates, indicating a stronger foundation for the current quarter and new year.
- Technical indicators suggest that the market may experience a pullback before the next leg up in the bull market.
Stocks spent most of yesterday churning sideways until the final hour when a push higher moved all the major averages into positive territory, but the technology sector was the laggard rather than leader for a change. Fed officials have been deployed by their commander with the mission of tamping down excessive levels of investor enthusiasm for risk assets. Their weapon of choice is hawkish rhetoric intended to lead the consensus into thinking that a rate-cut cycle is not starting any time soon. So far this year, this has been effective in stifling any progress for most stocks, except for a handful levitating on the euphoria over artificial intelligence. Still, I think it is inevitable that Chairman Powell will have to admit that inflation is close enough to the Fed's target of 2% that rate cuts can begin far sooner than he or his foot soldiers are suggesting. That should give way to the next leg up in this bull market....
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For further details see:
A Technical View Of Potential Downside For The Market