1. Moving the markets

On a manic Monday, the stock market got a jolt of energy, with Nvidia leading the charge like a caffeinated squirrel. As Wall Street’s eyes are glued to an upcoming AI extravaganza and the Fed’s crystal ball for future money moves, Nvidia’s shares did a little happy dance, jumping over 4% in anticipation of their GTC Conference. Here, they’re set to unveil their AI wizardry, and the crowd goes wild, with analysts throwing price targets around like confetti—one even sees a whopping 34% pot of gold at the end of the Nvidia rainbow.

Meanwhile, Alphabet’s shares boogied up 7%, their best performance in a year, on whispers of Apple cozying up to Google for some AI magic in iPhones. This tech tango comes after a fortnight of the S&P 500 and Nasdaq playing hard to get, while the Dow has been nursing a three-week hangover.

The Fed’s Open Market Committee is about to roll the dice in their March meeting. The two-day financial fiesta starts Tuesday, with the grand reveal on Wednesday. February’s hotter-than-a-jalapeño inflation numbers have left investors sweating, wondering if the Fed will play it cool or keep the interest rate heat on high.

As for the Fed funds futures, they’re betting a 99% chance that the interest rate party won’t stop this week. But the June rate cut rumors have cooled off to a lukewarm 55%.

In a plot twist, the most shorted stocks took a nosedive but then rocketed like they had FOMO, only to run out of steam by closing time. Treasury yields strutted higher, Bitcoin lost its groove below $68k, the dollar flexed its muscles, and gold just chilled.

Oil prices, on the other hand, turned up the heat on hopes of China’s growth spurt, Russia’s refinery drama, and Iraq’s pinky promise to stick to OPEC+’s production diet.

So, as traders don their fortune-teller hats for the Fed’s next move, one can’t help but wonder:

Will Powell cave to peer pressure and slash rates, or will he keep playing hardball?

1. Moving the markets

In the financial theater today, the S&P 500 experienced a slight setback after inflation data came in warmer than anticipated, propelling Treasury yields upward. Nvidia’s shares, on the other hand, were less fortunate, facing downward pressure.

The Producer Price Index (PPI) for February, which tracks wholesale inflation, rose by 0.6% last month, surpassing the expectations of a 0.3% increase. Stripping away the food and energy sectors, the core PPI climbed by 0.3%. Initially, the stock market seemed indifferent to the data, but it wasn’t long before the enthusiasm waned.

The burning question on traders’ minds is whether the Federal Reserve will adjust its rate cut strategy, potentially impacting the stock market rally. With bond yields on the rise, concerns about a market downturn are growing. It seems likely that both the Fed’s rate decisions and the bond yields will play a significant role in the market’s direction.

The inflation report has nudged bond yields higher, with the 10-year Treasury note adding 9 basis points. Nvidia’s shares have retreated for the fourth time in five sessions, dropping by nearly 3%.

As we approach the Federal Reserve’s policy meeting on March 19-20, this PPI report stands as the final piece of significant economic data. The macroeconomic landscape has been turbulent, with softer Retail Sales, unexpected rises in Producer Prices, and an increase in Jobless Claims, all contributing to a shift in rate-cut expectations.

Bond yields surged, pushing the 10-year to its annual peak, which in turn has impacted the major indexes, with Small Caps leading the decline. Banks felt the strain, and Nvidia’s streak of record highs has been interrupted, as investors move away from non-profitable tech stocks. The usual market buoyancy provided by short squeezes was notably missing.

The dollar strengthened alongside the bond yields, Bitcoin settled at the $70k mark after a significant ETF inflow, gold diverged from the dollar’s trajectory, and oil prices hit their highest point since early November.

Despite these developments, stocks seem to be maintaining a distance from rate hike expectations.

But the question remains: for how long can this detachment last?

1. Moving the markets

The S&P 500 took a breather Wednesday, retreating from its recent peak, as Nvidia’s sizzling start to 2024 finally saw a chill. The trading floor was still buzzing from Tuesday’s gains, where the S&P 500 and Nasdaq jumped over 1% after inflation reports aligned with the crystal ball predictions. Core inflation, minus the munchies and gas, ticked up a notch last month but didn’t dampen the spirits of the ever-optimistic market mavens.

As we inch closer to the Fed’s pow-wow on March 19, traders are on the edge of their seats, anticipating Fed Chair Jerome Powell’s next move. Will he stick to the script of being data-driven and keep a steady hand on the wheel?

In the meantime, it’s been a seesaw session: Small Caps took the lead, while Nasdaq played catch-up… that is until a last-minute sell-off shook things up. The Dow and Small Caps scraped together some modest wins, but Nasdaq and S&P weren’t so lucky, ending up in the red.

The “Magnificent 7” had a less than magnificent day, struggling to shine despite a brief comeback. Meanwhile, the most shorted stocks got a morning boost only to lose steam, mirroring bank stocks that started strong but closed weaker as the Fed’s safety net program (BTFP) wrapped up.

On the bond front, yields were up, but the real headline-grabber was Bitcoin’s ETFs, which saw a record-breaking influx of over $1 billion, catapulting Bitcoin to a dizzying $73,000 high. Not to be outdone, Gold wiped away its losses, and oil prices soared, adding to the market’s rollercoaster ride.

So, as we ponder the parallels between Cisco Systems and Nvidia, one must wonder: are we on the cusp of déjà vu all over again?