Key Inflation Gauge Seen Supporting Fed’s Patience on Rates – US Market Wrap

Stock traders decided to take some chips off the table at the start of a week that will see the Federal Reserve’s preferred inflation measure released on a day when markets are closed.

Equities experienced a mild pullback following a rally that propelled the S&P 500 to its best week in 2024. Investors became more cautious following speculation that the personal consumption expenditures price index, which is due on Good Friday, will show that inflation has remained uncomfortably high. On the same day, Jerome Powell is scheduled to speak.

A sense of caution also prevailed after a stock surge fueled speculation that the market had gone too far, too quickly. Concerns about a gap between earnings expectations and share prices have grown, with Morgan Stanley and JPMorgan warning that it will be difficult to justify lofty valuations if profit acceleration does not materialise.

The S&P 500 dropped below 5,220. Intel fell on news that China is restricting the use of foreign chips. Boeing rose after announcing that its CEO would step down. Treasury 10-year yields increased five basis points to 4.25%. Bitcoin surpassed $70,000.

The S&P 500 closed last week 14% higher than its 200-day moving average, indicating how overheated the stock market has become.