Ever since the U.S. posted hot inflation data in the last two reports, markets adjusted their expectations for the Federal Reserve cutting interest rates.
On Wednesday, the Bank of Canada took the lead in the rate-cut cycle. Earning the title of the first G7 nation to cut rates by 25 bps, markets inferred that the U.S. would cut rates.
This is not entirely likely. Still, the stock market’s hopes are all that matter. The 20+ year Treasury Bond ETF (TLT) bounced from around $89 to close at $93.35. It is down by 5.59% YTD. The bond could break its downtrend if the Fed cuts rates next Wednesday, June 12, 2024.
Bank stocks did not react to the rate cut hopes. JPMorgan Chase (JPM) is struggling to break out above $200. Wells Fargo (WFC) also risks breaking below the $58.70 support price. Its next support zone is around $50 (at the 200-day simple moving average). Conversely, Citigroup (C) may revisit its $64.98 high for the year.
Tech Stocks Rise
The Nasdaq (QQQ) is now at all-time highs, thanks to Nvidia (NVDA) gaining 5.16% and closing at $1,224.40. Momentum investors are not worried that NVDA stock trades at a 71.6 times P/E. Its PEG of 1.54 times is below that of Microsoft (MSFT) and Apple (AAPL), thanks to demand for AI servers.