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Bank of America chief strategist predicts hard landing for US economy, recommends 30-year Treasury bonds as hedge against downturn.

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Inflation data supports Fed rate cuts, yields test crucial 200-day average, creating favorable bond market trend. Powell downplays hike concerns.

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The U.S. Bureau of Labor Statistics accidentally released critical inflation data for April 30 minutes early on Wednesday. 

US Inflation Data Prematurely Released By Accident, Yet Traders Missed Golden Opportunity

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Inflation and retail sales slowed, signaling weaker consumer spending. Traders reacted by betting on Fed rate cuts, boosting S&amp;P 500 and Nasdaq 100 to record highs, while bonds also surged. Economists remain optimistic but cautious.

Economists React To Inflation, Retail Sales: &#39;The Soft Landing Narrative Is Still A Possibility But Not A Guarantee&#39;

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American producer inflation increases in April, exceeding estimates just before the consumer inflation report. 

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Wall Street kicked off a data-heavy week on a mixed note as traders await key inflation updates and remarks from Fed Chair Jerome Powell in the coming days.

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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.

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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.

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Following the ISM Services PMI data, market reactions saw stocks and bonds trimming their early morning gains, influenced by a cooler-than-expected jobs report.

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The likelihood of a hard landing — a scenario in which the U.S. economy abruptly falls into a recession, causing a rush to safe-haven investments — has progressively lost fashion among Wall Street <a href="https://www.benzinga.com/markets/equities/24/05/38820970/expect-rate-cuts-not-a-recession-fund-managers-most-bullish-on-stocks-in-over-2-years">forecasters and investors alike</a>.
Yet, Bank of America&#8217;s chief investment strategist, Michael Hartnett — who thrives on contrarian market views — has positioned himself in the unlikely hard-landing camp.
Hartnett unveiled what he believes to be the best portfolio hedge against <a href="https://www.benzinga.com/topic/michael-hartnett">such an economic downturn.</a>
<h3 class="wp-block-heading">The Case For 30-Year Treasury Bonds</h3>
Thirty-year Treasury bonds have fallen by 45% since April 2020. This marks the worst four-year period in the last 100 years.
Hartnett described bonds as being in an &#8220;early secular bear market,&#8221; driven by a combination of higher debt, deficits, reverse-globalization, and inflation, which have rapidly pushed bond yields higher.
Despite this grim performance, Hartnett suggests that once a limit is reached, the reversal could be as fast and strong as the initial decline. 
The secular bond bear market will end only when both the electorate on Main Street, through elections, and Wall Street, via lower debt ratings and failed auctions, vote for &#8220;less government fiscal excess,&#8221; according to Hartnett. 
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="692" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/17083057/image-71-1024x692.png" alt="" class="wp-image-343419" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/17083057/image-71-1024x692.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/17083057/image-71-300x203.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/17083057/image-71-768x519.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/17083057/image-71.png 1444w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h3 class="wp-block-heading">Hard Landing Likelihood &#8216;Too Low&#8217;</h3>
Hartnett pointed out that only 11% of global fund managers surveyed by Bank of America currently believe in the hard landing scenario. This indicates that the market sentiment is not aligned with this possibility.
He emphasized the stagnation of real retail sales in April, the stalling of global PMI surveys, and a shifting labor market from &#8220;unambiguously strong&#8221; to &#8220;ambiguously strong&#8221; to &#8220;ambiguous,&#8221; citing data such as the lowest small business hiring plans since 2020, job openings to unemployed ratios being the lowest since August 2021, and the highest unemployment rate since January 2022.
Hartnett noted that &#8220;no one is long 30-year Treasury,&#8221; attributing this broad-based investor pessimism to the dynamics of U.S. debt.
&#8220;The U.S. government spent $6.3 trillion in the past 12 months,&#8221; he remarked, adding that while the fourth year of the U.S. presidential cycle is typically the strongest for government spending, historically, a &#8220;big slowdown&#8221; in spending occurs in the first year of a new presidential cycle.
&#8220;At the margin, monetary policy will be easier, and fiscal policy will be tighter over the next 12 months, which is positive for bonds,&#8221; Hartnett stated. 
All these factors make &#8220;30-year Treasury the best cyclical hedge for a hard landing,&#8221; he concluded.
As the chart below illustrates, the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>), which closely mirrors the performance of the 30-year Treasury bond, would need to rally more than 65% to recoup its April 2020 levels.
Also Read: <a href="https://www.benzinga.com/general/macro-notification/24/05/38880563/disinflation-hopes-reshape-treasury-yields-major-trend-5-bond-etfs-poised-to-rally-on-">Disinflation Hopes Reshape Treasury Yields&#8217; Major Trend: 5 Bond ETFs Poised To Rally On Fed Rate Cuts</a>
<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/2024/05/17083316/image-73-1024x495.png" alt="" class="wp-image-343431" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/17083316/image-73-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/17083316/image-73-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/17083316/image-73-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/17083316/image-73-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/17083316/image-73.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Hartnett&#8217;s Views on Other Asset Classes
Hartnett also shared his views on other asset classes. He believes commodities are in an &#8220;early secular bull&#8221; market, driven by debt, deficits, reverse-globalization due to higher tariffs, inflation, AI, and climate change.
He describes U.S. stocks as being in a &#8220;late secular bull&#8221; market, with no change in leadership since 2009 and no recession to shift the market structure. He argued that &#8220;valuations are inconsistent with a new bull market.&#8221;
Hartnett sees gold in an &#8220;early secular bull&#8221; market, viewing it as an alternative to the U.S. dollar, akin to cryptocurrency, serving as a hedge against a &#8220;bear market in institutional trust.&#8221;
Now Read: <a href="https://www.benzinga.com/markets/equities/24/05/38820970/expect-rate-cuts-not-a-recession-fund-managers-most-bullish-on-stocks-in-over-2-years">Expect Rate Cuts, Not Recession &#8211; Fund Managers Most Bullish On Stocks In Over 2 Years</a>
Image: Shutterstock

Bank Of America's Contrarian Guru Unveils Best Portfolio Hedge Against Hard Landing: 'No One Is Long'

A major trend shift is unfolding in the bond market, as key Treasury yields are currently testing the support of the crucial 200-day moving average, following the release of benign economic data that has cemented investor bets on <a href="https://www.benzinga.com/markets/equities/24/05/38842603/us-inflation-falls-as-expected-in-april-bolsters-fed-rate-cut-bets">Federal Reserve rate cuts.</a>
Last month, the inflation rate calculated using the consumer price index (CPI) came in at 3.4% compared to the same month last year, down from 3.5% in March, and in line with the forecasted 3.4% increase. The &#8220;core&#8221; inflation rate, which excludes volatile energy and food prices, also matched estimates, falling from 3.8% to 3.6%.
April's inflation reading has raised hopes that the disinflation trend may restart after three consecutive higher-than-predicted CPI readings in the first quarter. 
In his recent comments, Federal Reserve Chair Jerome Powell downplayed concerns about a possible hike in interest rates, signaling that the next adjustment would likely be a reduction. However, he emphasized this cut might come later than the markets initially anticipated.
Money markets are currently factoring in a 50 basis point reduction in interest rates by the end of the year, with a 70% chance for the Federal Reserve to begin its loosening cycle in September.
<h1 class="wp-block-heading">Treasury Yields Eye 200-Day Moving Average Support</h1>
The yield on the benchmark 10-year Treasury note traded at around 3.36% on Thursday, hitting an intraday low of 3.31%, temporarily sliding below the 200-day average positioned at 3.33%. 
Similarly, yields on both 2-year and 30-year Treasury notes are currently testing the support of the 200-day average.
The 200-day moving average is a widely watched technical indicator that helps investors gauge the long-term trend of a security or index. 
When Treasury yields fall below this level, it often signals a bearish or downward trend, suggesting that investors are seeking safer assets amid expectations of a slowing economy or lower interest rates. This shift can create a more favorable environment for bond prices, which move inversely to yields.
Here&#8217;s a snapshot of the current yield levels compared to their 200-day moving averages, as well as their 2024 high-to-low range. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>Maturity</th>
<th>Current Yield</th>
<th>200-day Moving Average</th>
<th>2024 Peak</th>
<th>2024 Low</th>
</tr>
</thead>
<tbody>
<tr>
<td>2 year</td>
<td>4.78%</td>
<td>4.75%</td>
<td>5.05%</td>
<td>4.12%</td>
</tr>
<tr>
<td>5 year</td>
<td>4.39%</td>
<td>4.35%</td>
<td>4.75%</td>
<td>3.75%</td>
</tr>
<tr>
<td>10 year</td>
<td>4.36%</td>
<td>4.33%</td>
<td>4.74%</td>
<td>3.82%</td>
</tr>
<tr>
<td>30 year</td>
<td>4.50%</td>
<td>4.48%</td>
<td>4.85%</td>
<td>4.07%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Updated as of May 16, 2024 (11:45 a.m. EDT) </figcaption></figure>
<h1 class="wp-block-heading">Chart: Inflation Data Casts Doubt On 10-Year Treasury Yield&#8217;s 2024 Rising Trend</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/2024/05/16112728/image-70-1024x495.png" alt="" class="wp-image-341796" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Read Also: <a href="https://www.benzinga.com/economics/macro-economic-events/24/05/38873168/us-inflation-data-prematurely-released-by-accident-yet-traders-missed-golden-oppo">US Inflation Data Prematurely Released By Accident, Yet Traders Missed Golden Opportunity</a>
<h1 class="wp-block-heading">Bond ETFs Set To Rally</h1>
The shift in Treasury yields has set the stage for a rally in bond ETFs, especially those focused on long-duration bonds. 
Here are five bond ETFs poised to benefit from rising expectations of Fed rate cuts:
<ol>
<li>iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>): This ETF tracks long-term U.S. Treasury bonds and is particularly sensitive to changes in interest rates. With long-dated yields falling, TLT could see sharp gains as it moves inversely to yields. In reaction to April&#8217;s inflation data, it rose 1.4% on the day.</li>
<li>Vanguard Total Bond Market Index Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BND#NYSE">BND</a>): A broader option, BND includes a mix of short-, medium-, and long-term bonds. Its diversified approach makes it a stable choice as market sentiments shift. Following the latest inflation statistics, BND inched 0.6% higher.</li>
<li>iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>): As rate cut expectations strengthen, investment-grade corporate bonds could see price increases. LQD offers exposure to this segment.</li>
<li>SPDR Bloomberg High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNK#NYSE">JNK</a>): Higher risk and higher reward, JNK covers the high-yield, or &#8220;junk,&#8221; bond market. Rate cuts often boost these bonds as investors hunt for yield.</li>
<li>iShares J.P. Morgan USD Emerging Market Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NYSE">EMB</a>): As Treasury yields retreat and the Fed hints at a slower pace for rate hikes, emerging markets bonds could benefit from increased investor appetite for higher-yielding assets. Notably, EMB rose 1.1% on Wednesday, positively reacting to inflation data. </li>
</ol>
Read Now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/05/38850154/economists-react-to-inflation-retail-sales-the-soft-landing-narrative-is-still-a-po">Economists React To Inflation, Retail Sales: &#8216;The Soft Landing Narrative Is Still A Possibility But Not A Guarantee&#8217;</a>
Photo: Shutterstock

Disinflation Hopes Reshape Treasury Yields' Major Trend: 5 Bond ETFs Poised To Rally On Fed Rate Cuts

The U.S. Bureau of Labor Statistics accidentally released critical inflation data for April 30 <a href="https://www.benzinga.com/markets/equities/24/05/38842603/us-inflation-falls-as-expected-in-april-bolsters-fed-rate-cut-bets">minutes early on Wednesday. </a>
Yet, in a twist fit for a financial thriller, the sleeping investors failed to capitalize on this advance peek, missing out on what could have been a golden opportunity to gain from trading.
On a day when microseconds can mean huge returns, the early availability of Consumer Price Index (CPI) figures should have set off a frenzy of buying and selling. 
The CPI data, meticulously watched by traders, highly influences global asset prices and Federal Reserve policy. Under normal circumstances, these figures are unveiled with extreme precision at 8:30 a.m. Washington time, surrounded by high security to prevent leaks.
However, this Wednesday was different. &#8220;In advance of today's CPI and Real Earnings releases, BLS inadvertently loaded a subset of files to the website approximately 30 minutes prior to the release,&#8221; the Bureau admitted in a post-incident statement.
Yet the market remained oddly still, with no significant movements detected during the premature window.
<h3 class="wp-block-heading">Inflation Data Pushed Stocks To Record Highs, Bitcoin&#8217;s Strongest Day In Two Months</h3>
It wasn&#8217;t until the scheduled release time that the markets woke up. U.S. stock-index futures surged, and Treasury yields dipped as the official data hit the news. 
Major indices including the S&amp;P 500, Nasdaq 100, and Dow Jones Industrial Average <a href="https://www.benzinga.com/markets/equities/24/05/38857144/s-p-500-nasdaq-100-dow-jones-shatter-record-highs-in-unstoppable-bull-market-rally">rocketed to record highs</a>, closing the day up 1.2%, 1.5%, and 0.9%, respectively. 
The inflation data, aligning closely with forecasts, prompted traders to raise their Fed rate cut expectations, triggering a drop in Treasury yields and a rally in rate-sensitive sectors like technology and real estate.
The Real Estate Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLRE#NYSE">XLRE</a>) soared 1.7%, on track to mark its strongest week since December 2023. 
Long-dated Treasury bonds, as tracked by the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>), rose 1.4%. 
Meanwhile, the more speculative cryptocurrency market responded dramatically post-release, with Bitcoin (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/btc/usd">BTC</a>) rocketing 7.6% in its best daily performance in nearly two months. 
As illustrated in the chart below, the majority of the day&#8217;s gains occurred after 8:30 a.m. EDT, suggesting that traders were unaware of the early data release on the BLS website.
Chart: Bitcoin Skyrocketed Only After Inflation Data Hit the News
<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/2024/05/16082704/image-69-1024x495.png" alt="" class="wp-image-341407" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16082704/image-69-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16082704/image-69-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16082704/image-69-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16082704/image-69-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16082704/image-69.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h3 class="wp-block-heading">Previous Incidents And Scrutiny</h3>
This incident has reignited scrutiny over the BLS&#8217;s data practices. 
<a href="https://www.bloomberg.com/news/articles/2024-05-16/us-bls-says-april-cpi-data-inadvertently-posted-30-min-early?srnd=homepage-americas&amp;sref=TBDibEcD">Bloomberg News</a> recently uncovered communications between a BLS economist and major Wall Street firms, including JPMorgan Chase &amp; Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JPM#NYSE">JPM</a>) and BlackRock Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BLK#NYSE">BLK</a>), about key inflation figures, sparking concerns over equitable data access.
And a sudden rally in Treasuries futures seconds before favorable inflation data in December 2022 raised alarms about potential leaks or hacks. No evidence of wrongdoing was found.
Regarding this week&#8217;s incident, the BLS has responded by notifying the Office of Management and Budget and the Labor Department's Inspector General. It promises a &#8220;full investigation into its procedures and controls to ensure the incident is not repeated.&#8221;
Now Read: <a href="https://www.benzinga.com/economics/macro-economic-events/24/05/38857662/jamie-dimon-sounds-alarm-on-ballooning-us-fiscal-deficit-it-will-cause-a-problem">Jamie Dimon Sounds Alarm On Ballooning US Fiscal Deficit: &#8216;It Will Cause A Problem&#8217;</a>
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Traders woke up on Wednesday to new updates on last month&#8217;s inflation and retail sales trends, indicating slowing price pressures and a weaker-than-expected consumer <a href="https://www.benzinga.com/markets/equities/24/05/38842603/us-inflation-falls-as-expected-in-april-bolsters-fed-rate-cut-bets">spending in the U.S.</a>
As a reminder, the headline inflation rate slowed as predicted from 3.5% to 3.4% year-on-year in April 2023, while retail sales showed a flat month-on-month reading, sharply decelerating from the previous 0.6% and the expected 0.4% rise. 
The data triggered positive market reactions as traders bolstered their rate-cut convictions. 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>), and 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>), rallying 0.8% and 0.9%, respectively, with both indices <a href="https://www.benzinga.com/markets/equities/24/05/38845059/s-p-500-nasdaq-100-hit-record-highs-as-benign-inflation-data-supports-fed-rate-cut-prospects">hitting fresh record highs. </a>
Notably, bonds rocketed as Treasury yields tanked, with the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) up by 1.2%, eyeing its top-performing session since early March. 
Economists and financial experts weighed in on the latest consumer price index (CPI) inflation report and retail sales data to explain the implications for the market and Federal Reserve policy.
Here&#8217;s what they had to say:
<h1 class="wp-block-heading">Still In A Bull Market</h1>
Chris Zaccarelli, chief investment officer, Independent Advisor Alliance, remarked the good news is the CPI hasn't reaccelerated and, most importantly, it was less-than-expected month-over-month (0.3% vs 0.4%), but the bad news is consumers seem to be reducing their spending.
He believes the slowdown in spending &#8220;could turn into a problem for the economy, in the immediate term it takes some pressure off the Fed and that is what has been moving bond and stock markets the past couple of months.&#8221;
He remains optimistic, stating &#8220;We believe we are still in a Bull Market,&#8221; and expecting &#8220;the knee-jerk negative reaction on the Retail Sales miss to be overcome by the relatively good news on the CPI data which is at or below expectations.&#8221;
<h1 class="wp-block-heading">BofA Holds One-Rate Cut View</h1>
Stephen Juneau, economist at Bank of America, noted, &#8220;The April CPI report was broadly in-line with our expectations as headline and core CPI both rose by 0.3% m/m.&#8221;
He cautioned, &#8220;While the inflation data are a step in the right direction, it is one report. We retain our call for the first cut in December&#8221;
Regarding market reactions, Juneau stated, &#8220;Market pricing thinks a cut in September and two cuts this year is very likely. We think inflation data will have to slow much more or the labor market data needs to weaken to really bring a September cut into play.&#8221;
&#8220;The miss on April retail sales does not meaningfully change our consumer outlook. Core control retail sales are still running at a solid 2.7% on a three-month annualized basis,&#8221;&nbsp;Aditya Bhave, economist at Bank of America, commented.
Bhave believes the retail sales data indicate a &#8220;benign moderation&#8221; in economic activity, rather than a drastic decline.
<h1 class="wp-block-heading">Good Signs From Easing Services Inflation, Less From Retail Sales</h1>
&#8220;This report gave us some good signs that services inflation is easing,&#8221; Jeffrey Roach, chief economist, LPL Financial, said. 
He highlighted that grocery prices fell in April, giving some relief, especially to lower-income consumers. 
Despite positive signs, Roach mentioned, &#8220;The soft landing narrative is still a possibility but not a guarantee. Markets will be looking for more confirmation and the weak retail sales report did not help.&#8221;
Roach sees commodities benefit from a period of sticky inflation, as supply and demand imbalances remain. 
<h1 class="wp-block-heading">Fed Is Not Out Of The Woods Yet</h1>
Skyler Weinand, chief investment officer for Regan Capital, observed the &#8220;Softer-than-expected CPI print gives the Federal Reserve a tad bit of breathing room to potentially cut rates as early as September.&#8221;
He also noted, &#8220;We're still a far cry from the Fed&#8217;s desired 2% inflation level and the economy remains strong.&#8221;
On policy direction, Weinand believes, &#8220;It's more likely for the Fed's next move will be to raise rates than to cut.&#8221;
The expert mentions the &#8220;Fed is not out of the wood yet.&#8221; He explains with elevated pressure on rates from the U.S. fiscal policy, &#8220;Whomever gets elected as president in November will continue to run extravagant deficits despite the U.S. economy being incredibly strong.&#8221; 
As such, the Fed will have to tackle higher inflation rates with elevated interest rates.
<h1 class="wp-block-heading">Positive Signs For The Upcoming PCE Report</h1>
Tuan Nguyen, economist at RSM US LLP, said, &#8220;Lower inflation and spending should mean more relief for the Federal Reserve as it tries to bring inflation down to its 2% target.&#8221;
He adds, &#8220;Given Wednesday's CPI data and the producer price index data released on Tuesday, we should expect some softening in the PCE data when it is released at the end of the month.&#8221;
Nguyen believes, &#8220;The economic fundamentals remain encouraging for further disinflation, even though the path to price stability has been bumpy.&#8221;
<h1 class="wp-block-heading">Inflation Is On A Slowing Trajectory</h1>
Bill Adams, chief economist for Comerica Bank, highlights that the decrease in core inflation and sluggish retail sales support the likelihood of the Federal Reserve cutting interest rates this year. He observes elevated interest rates are impacting the prices of durable goods and decelerating the rise in shelter costs within the CPI basket.
Comerica predicts the Fed will initiate a reduction in the federal funds rate starting with a cut in September, followed by another in December.
&#8220;Growth will likely stay in a lower gear in the rest of 2024. That will allow the U.S. economy's productive capacity to catch up with demand, keeping inflation on a slowing trajectory,&#8221; Adams said. 
Regarding retail sales, Adams stresses that the April figures did not substantially alter their outlook for consumer spending as core control retail sales maintained a healthy increase of 2.7% on a three-month annualized basis. Furthermore, he observes recent consumer spending has been stronger in services, which are largely excluded from retail sales data, than in goods.
Read Now: <a href="https://www.benzinga.com/general/biotech/24/05/38845991/eli-lilly-strikes-deal-to-combat-counterfeit-diabetes-and-weight-loss-drugs-mounjaro-and-zepbound">Eli Lilly Strikes Deal To Combat Counterfeit Diabetes And Weight Loss Drugs Mounjaro And Zepbound</a>
Photo: Shutterstock

Economists React To Inflation, Retail Sales: 'The Soft Landing Narrative Is Still A Possibility But Not A Guarantee'

Inflation affecting American producers showed a broader uptick in April, with the headline month-over-month figure far exceeding estimates Tuesday, one day before the critical consumer <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/05/38790019/april-inflation-data-preview-why-analysts-expect-economic-pressure-to-cool">inflation report is released.</a>
The Producer Price Index (PPI) shows an increase of 0.5% in April compared to March, reaching its highest level in a year.
<h3 class="wp-block-heading">April PPI Report: Key Highlights</h3>
<ul>
<li>The headline PPI surged by 2.2% in April 2024 on a year-over-year basis, surpassing the previous downwardly revised annual rate of 1.8% and matching expectations of 2.2%.</li>
<li>The month-on-month increase in the headline PPI was 0.5% in April, marking an acceleration from the downwardly revised 0.1% drop and topping estimates of 0.3%.</li>
<li>The PPI for goods witnessed a 0.4% monthly increase, affected by a 2% rise in the energy item.</li>
<li>The PPI for services saw a 0.6% monthly surge, with the trade item rising by 0.8%.</li>
<li>The core PPI, which excludes food and energy, held steady at 2.4% annually, as expected. </li>
<li>On a monthly basis, the core PPI jumped 0.5%, accelerating from the previous downwardly revised 0.1% drop and topping estimates of 0.2%.</li>
</ul>
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>PPI Measure</th>
<th>Mar. 2024</th>
<th>Apr. 2024</th>
<th>Exp.</th>
</tr>
</thead>
<tbody>
<tr>
<td>Headline (Y/Y)</td>
<td>1.8%</td>
<td>2.2%</td>
<td>2.2%</td>
</tr>
<tr>
<td>Headline (M/M)</td>
<td>-0.1%</td>
<td>0.5%</td>
<td>0.3%</td>
</tr>
<tr>
<td>Core (Y/Y)</td>
<td>2.4%</td>
<td>2.4%</td>
<td>2.4%</td>
</tr>
<tr>
<td>Core (M/M)</td>
<td>-0.1%</td>
<td>0.5%</td>
<td>0.2%</td>
</tr>
</tbody>
</table>
</figure>
<h3 class="wp-block-heading">Market Reactions</h3>
Prior to the PPI release, traders had priced in nearly 50 basis points of Fed rate cuts by year end.
Treasury yields rose across the board, with the rate-sensitive two-year yield up 4 basis points to 4.88% as of 8:33 a.m. in New York.
The U.S. dollar index (DXY), as tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UUP#NYSE">UUP</a>), strengthened 0.2%. 
Futures on major U.S. stock indices trended lower on Tuesday premarket trading. On Monday, the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) closed flat.
Gold, as tracked by the SPDR Gold Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GLD#NYSE">GLD</a>), rose 0.5% to $2,343 per ounce.
Read now: <a href="https://www.benzinga.com/markets/cryptocurrency/24/05/38804015/as-roaring-kitty-returns-here-are-3-etfs-to-leverage-the-2024-meme-stock-wave">As &#8216;Roaring Kitty&#8217; Returns, Here Are 3 ETFs To Leverage The 2024 Meme Stock Wave</a>
Photo via Shutterstock.

Wall Street kicked off a data-heavy week on a mixed note as traders await key inflation updates and remarks from Fed Chair Jerome Powell <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/05/38790019/april-inflation-data-preview-why-analysts-expect-economic-pressure-to-cool">in the coming days.</a>
The S&amp;P 500 remained stable, hovering around Friday&#8217;s closing levels and not far from record highs. The Nasdaq 100 rose 0.2%, poised for its third consecutive session of gains, marking the seventh positive session in the last eight.
Blue-chip stocks were also trading flat at midday, striving to extend their winning streak to the ninth consecutive day. 
The Russell 2000, tracking small-cap stocks, managed to outperform, up 0.6%. 
Treasury yields moved slightly lower, with the 10-year yield easing from 4.5% to 4.47%. The iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) rose 0.4%.
Animal spirits resurfaced in the meme stocks, as GameStop Inc. soared over 70% following a social media update from &#8220;Roaring Kitty,&#8221; a prominent figure in the<a href="https://www.benzinga.com/markets/equities/24/05/38787490/gamestop-shares-surge-as-roaring-kitty-resurfaces-after-3-year-silence"> 2021 meme stock phenomenon.</a>
Exchange-traded funds linked to themes like meme stocks, cryptocurrencies and high-sentiment stocks, such as the Schwab Crypto Thematic ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/STCE#NYSE">STCE</a>) or the SoFi Social 50 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SFYF#NYSE">SFYF</a>), saw broad-based rallies. In the cryptocurrency space, Dogecoin (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/doge/usd">DOGE</a>) outperformed peers, up over 10%, while Bitcoin (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/btc/usd">BTC</a>) rose 3.2%.
Read also: <a href="https://www.benzinga.com/general/education/24/05/38793704/who-is-roaring-kitty-why-does-his-return-to-social-media-matter-for-gamestop-stock">Who Is Roaring Kitty? Why Does His Return To Social Media Matter For GameStop Stock?</a>
Another notable market movement occurred in Chinese stocks, fueled by Tencent Music Entertainment Group (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TME#NYSE">TME</a>) reporting revenue that surpassed expectations, resulting in a 9.3% surge in its shares. 
The KraneShares CSI China Internet ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KWEB#NYSE">KWEB</a>) and the Invesco Golden Dragon China ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PGJ#NASDAQ">PGJ</a>) both saw gains of 3.9% and 3.8%, respectively, ahead of a flurry of upcoming company earnings reports this week, including Alibaba Group Holding Ltd. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BABA#NYSE">BABA</a>), Baidu Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BIDU#NASDAQ">BIDU</a>) and JD.com Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/JD#NASDAQ">JD</a>).
In the commodities market, oil rebounded 0.8% while gold fell 1%. 
<h3 class="wp-block-heading">Monday&#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>Russell 2000</td>
<td>2,073.47</td>
<td>0.6%</td>
</tr>
<tr>
<td>Nasdaq 100</td>
<td>18,196.52</td>
<td>0.2%</td>
</tr>
<tr>
<td>S&amp;P 500</td>
<td>5,220.03</td>
<td>0.0%</td>
</tr>
<tr>
<td>Dow Jones</td>
<td>39,457.14</td>
<td>0.0%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Updated at 12:38 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>) was 0.1% up to $521.20, the&nbsp;SPDR Dow Jones Industrial Average (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIA#NYSE">DIA</a>) was flat at $395.02 and the tech-heavy&nbsp;Invesco QQQ Trust&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>) was up 0.3% to $443.26, according to&nbsp;<a href="https://pro.benzinga.com/dashboard">Benzinga Pro data</a>.&nbsp;
Sector-wise, the Technology Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLK#NYSE">XLK</a>) outperformed, up 0.8%. The Communication Services Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLC#NYSE">XLC</a>) was the major laggard, down 0.6%.
<h3 class="wp-block-heading">Monday&#8217;s Stock Movers</h3>
<ul>
<li>Meme-related stocks experienced significant rallies across the board, driven by the dramatic surge in GameStop. AMC Entertainment Holdings (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AMC#NYSE">AMC</a>) surged over 40%, Beyond Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BYON#NYSE">BYON</a>) nearly 20%, Incyte Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/INCY#NASDAQ">INCY</a>) was up 7% and Bitcoin-linked MicroStrategy Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSTR#NASDAQ">MSTR</a>) saw a 6% increase. Robinhood Markets Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/HOOD#NASDAQ">HOOD</a>) rose by 6% as well.</li>
<li>Intel Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/INTC#NASDAQ">INTC</a>) gained almost 3% amid rumors of a deal with Apollo Global Management (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/APO#NYSE">APO</a>), with the latter poised to invest over $11 billion in a new plant in Ireland.</li>
<li>Stocks reacting to earnings included Fortrea Holdings Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/FTRE#NASDAQ">FTRE</a>) down 15%, NET Power Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NPWR#NYSE">NPWR</a>) down 0.5% and Paysafe Ltd. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PSFE#NYSE">PSFE</a>) up 4.2%. </li>
<li>Companies reporting earnings after the close are StoneCo Ltd. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/STNE#NASDAQ">STNE</a>), Intercorp Financial Services Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IFS#NYSE">IFS</a>) and Agilysys Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AGYS#NASDAQ">AGYS</a>). </li>
</ul>
Now read: <a href="https://www.benzinga.com/news/24/05/38789552/are-meme-stocks-back-heres-whats-going-on-with-shares-of-gamestop-amc-entertainment-koss-corp-and-mo">Are Meme Stocks Back? Here&#8217;s What&#8217;s Going On With Shares Of GameStop, AMC Entertainment, Koss Corp And More</a>
Illustration created using artificial intelligence via MidJourney.

DOGE

Tech Stocks Inch Higher Ahead Of Key Inflation Data, GameStop Skyrockets, Tencent Fuels China Rally: What's Driving Markets Monday?

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.
Read now: <a href="https://www.benzinga.com/markets/asia/24/05/38760872/us-ready-to-impose-new-tariffs-on-chinas-ev-solar-sectors-could-cause-more-severe-damage-than-last-t">US Ready To Impose New Tariffs On China&#8217;s EV, Solar Sectors: &#8216;Could Cause More Severe Damage&#8217; Than Last Trade War</a>
Photo: Shutterstock

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>
Photo: Shutterstock

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.
Read now: <a href="https://www.benzinga.com/markets/equities/24/05/38607876/steve-jobs-wasnt-a-fan-but-apples-record-stock-buyback-is-so-massive-it-dwarfs-valuations-of-boe">Steve Jobs Wasn&#8217;t A Fan, But Apple&#8217;s Record Stock Buyback Is So Massive It Dwarfs Valuations Of Boeing, Starbucks, eBay And 415 Other S&amp;P 500 Companies</a>
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.

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.

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.

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>

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>

Mid Cap

BIIB

LRCX

ODFL

ORLY

STLD

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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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

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

Global Economic Outlook: May 2024

Fed won't cut rates until it sees 'consistent' downward trend in inflation – IHS Markit

BlackRock's Rieder says Fed rate cut would tame inflation by tamping down services demand

<a href="https://investorplace.com">InvestorPlace - Stock Market News, Stock Advice &amp; Trading Tips</a>
Betting against the U.S. economy can be exceptionally lucrative, especially if you&rsquo;re one of the people who has intimate knowledge of the laws that govern and regulate it. After all, politicians know what laws will be passed before they are passed and can thus take positions, or buy options that they can directly control the outcome of. Moreover, politicians betting on stock market crash dynamics have a vested interest in ensuring such crashes occur, once more pitting them against their constituents.



That sounds more like treason rather than insider trading since it directly requires those politicians to make bets against the American investor whose livelihood may depend on the funds and stocks those politicians short. As such, here are just <a href="https://twitter.com/QuiverQuant/status/1780997042371785097">three examples of U.S. senators and representatives</a> who directly took perfectly timed positions against various exchange-traded funds. These exchange-traded funds (ETFs) are all derived from the performance of the U.S. stock market due to their large size and composition.



<h2>Representative Mark Green</h2>



<div><img width="300" height="169" src="https://investorplace.com/wp-content/uploads/2022/04/spy-1600-300x169.png" alt="S&amp;P 500 block letters displayed on a light blue background. SPY stock."><div>Source: 22 TREE HOUSE / Shutterstock</div></div>Representative Mark Green shorted the SPDR S&amp;P 500 ETF Trust (NYSEARCA:<a href="https://investorplace.com/stock-quotes/spy-stock-quote/">SPY</a>), the largest and oldest ETF in the United States. Its value is tied directly to the performance of the S&amp;P 500 which represents the performance of America&rsquo;s 500 largest and most economically influential companies.



Mark Green purchased a put option on SPY back in August of 2023 with a <a href="https://twitter.com/QuiverQuant/status/1780997042371785097/photo/1">target price of $440 set to expire on January 19, 2024</a>. This trade implies that Representative Green expected the fund to dip well below this price before then, as a put option would result in his option sale profits multiplying by whatever the odds ratio was at the time.&nbsp;



Once <a href="https://www.quiverquant.com/congresstrading/politician/Mark%20E.%20Green-G000590">QuiverQuantitative</a> publicized this trade online, Green sold his shares a few weeks later. However, this openly proves that Green was expecting something to negatively impact market dynamics at the time, which means he might have had advanced warning of such.



<h2>Representative Tom Malinowski</h2>



<div><img width="300" height="169" src="https://investorplace.com/wp-content/uploads/2020/02/ishares1600-300x169.jpg" alt="iShares by Blackrock sign"><div>Source: Sundry Photography / Shutterstock.com</div></div>Another example of politicians betting on stock market crash outcomes, Representative Tom Malinowski shorted the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a href="https://investorplace.com/stock-quotes/tlt-stock-quote/">TLT</a>) back in 2020. Since the trade, the <a href="https://twitter.com/QuiverQuant/status/1780997042371785097/photo/2">ETF has lost 45% of its value</a>, marking its largest drawdown in history. That sounds almost too perfect to be a coincidence.&nbsp;



As interest rate hikes climbed over the years following the trade in 2020, the value of the treasury bonds in the ETF dropped. Of course, Representative Malinowski might not have had any control over the Federal Reserve&rsquo;s <a href="https://www.thestreet.com/fed/fed-rate-hikes-2022-2023-timeline-discussion#:~:text=In%20March%202022%2C%20the%20Fed,not%20been%20cut%20since%20then.">rate hike schedule</a> to tame inflation, but he likely had insider information as to when it would occur, and timed his option to profit off of it.



This kind of decision-making is even more disturbing when you consider that the value of U.S. Treasury bonds comes directly from the taxes the government can levy on its citizens. Thus, for the bonds to pay out, the government must raise taxes on U.S. citizens who already struggling with persistent inflation and stagnating wages.



<h2>Senator Thomas Carper</h2>



<div><img width="300" height="169" src="https://investorplace.com/wp-content/uploads/2022/06/etf-1600-2-300x169.png" alt="Blocks that spell out ETF in front of jar with money and change."><div>Source: SHUN_J / Shutterstock</div></div>One of the longest-standing and leading members of Congress, Senator Thomas Carper aggressively shorted the U.S. stock market in 2023. His most recent short included his purchase of the AdvisorShares Ranger Equity Bear ETF (NYSEARCA:<a href="https://investorplace.com/stock-quotes/hdge-stock-quote/">HDGE</a>). This trade included potentially purchasing up to $45,000 worth of shares.



This transaction mirrors similar trades made by Carper in November 2022, when he had <a href="https://markets.businessinsider.com/news/etf/us-senator-who-serves-on-finance-committee-profits-from-betting-against-the-stock-market-%E2%80%94-and-he-just-bet-the-same-again-1032783218">bought up to $110,000 in HDGE</a>. This ETF directly appreciates capital investments through short sales of domestically traded equity securities. To put it more simply, Carper makes money when the market suffers.&nbsp;



These trades are even more concerning when considering that Carper sits on the Senate Finance Committee. As a result, he almost certainly has some level of insider knowledge as to government decisions that will impact the U.S. banking and trading system. So if you&rsquo;ve ever wondered how regular people become politicians go into Congress and come out millionaires, look no further than the trading activity of Thomas Carper.



On the date of publication, Viktor Zarev&nbsp;did not have (either directly or indirectly) any positions in the securities mentioned in this article.&nbsp;The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com&nbsp;<a href="https://investorplace.com/corporate/investorplace-publishing-guidelines/" target="_blank">Publishing Guidelines</a>.
<div>Viktor Zarev is a scientist, researcher, and writer specializing in explaining the complex world of technology stocks through dedication to accuracy and understanding.</div><h3>More From InvestorPlace</h3>
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The post <a href="https://investorplace.com/2024/05/3-politicians-betting-on-a-stock-market-crash-in-2024/">3 Politicians Betting on a Stock Market Crash in 2024 </a> appeared first on <a href="https://investorplace.com">InvestorPlace</a>.

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John BoozmanSenate (R-AR)	$1K - $15K	Purchase	May 08, 2024	Feb 20, 2024	Senate
Robert WittmanHouse (R-VA)	$1K - $15K	Purchase	Apr 09, 2022	Mar 29, 2022	House

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