The Buzz on Business for March 6th, 2024

There is an old Wall Street maxim that says, “Don’t fight the Fed.” It means that if the Fed is tightening, if rates are rising, if the punch bowl has been taken away, that might not be the time to go on a buying spree.

Likewise, if the Fed is loosening, if rates are falling, if the money supply is growing, you probably don’t wanna be sitting on the sidelines with a big pile of cash.

Now, we’re not so sure this is a maxim to live by. We think rational investors are always fully invested and have other strategies in place to deal with the vagaries of interest rates and the ups and downs of the markets.

But there is no doubt that Wall Street has been defying the Fed for the last four months. Stocks rose rapidly as new money piled in. The Fed was clear: fighting inflation was job one, and higher for longer was the order of the day.

Today, Federal Reserve Board Chairman Jerome Powell testifies before Congress, and yesterday, traders finally began to wonder if they have been on the wrong side these last four months.

Stock Market Report

Lots and lots of red numbers all up and down the giant quote machine on Tuesday afternoon. The only green number we saw was volume, which spiked throughout the day, adding some fuel to this sell-off. Although it appears to us that most of the selling was of the big cap techs.

• The Dow Jones Industrials were off 405 points. That’s one percent, and they closed at 38,585.
• The S&P 500 likewise was off one percent. It closed at 5079, off 52 points.
• The NASDAQ Composite got the worst of it. It was off over 1.6% and closed back below 16,000 at 15,940, off 268 points.
• The small caps are usually more volatile than the big cap indexes but fared a bit better yesterday. The Russell 2000 was off eight-tenths of a percent and closed at 2,054, off 18 points.

Interestingly, the S&P 500 Equal Weight Index was only off half a percent, while the regular S&P 500 was off by over a full percent. This indicates that the larger-cap stocks in the market-weighted index took most of the selling.

Bond Market Report

Interest rates were down across the board on Tuesday. Not what we would expect from a nervous Wall Street the day before the Federal Reserve Board Chairman testifies.

• The yield on the 2-year treasury closed at 4.562%, off four basis points.
• The 20-year was off six ticks and finished the session at 4.413%.

Oil, Gold, and Bitcoin

• Oil was down $0.62 and closed at $78.06.
• Gold continued its winning ways. It was up $10.00 and closed at $2,136 a troy ounce.
• Apparently, Bitcoin doesn’t just go up. As of 4:00 PM Eastern Time, Bitcoin stood at $61,800.11, off $5,641.04. A Rough Day for Bitcoin, which has more than doubled since November.

Target (Not Costco!) Exceeds Expectations

Speaking of being wrong, yesterday, we said that Costco was reporting earnings before the bell on Tuesday. No, no, it was Target. Costco reports tomorrow. What were we thinking?

Confounding those who worry about consumers being tapped out, Target easily beat its numbers for the fourth quarter. The stock was up over 12% on the session Tuesday.

Potentially Market Moving Economic Data on Tap

We will all be huddled around the telescreens, watching Chairman Powell. But there is more on the economic calendar than just his testimony.

• Today, we get the ADP Non-Farm Payroll report.
• We get the JOLTS job openings report for January.
• We get the Atlanta Fed’s GDP Now report.
• And the Fed’s Beige Book: its report on the state of the economy.

Everyone here at the Ministry of Truth is on mandatory double shifts to make sure we have gone through all of the numbers and what they all mean so we can report all of it to you tomorrow. All you need to do is keep it right here on the Buzz.