The S&P 500 fell last week to start Q2 on a sour note as Federal Reserve officials indicated they were in no rush to cut interest rates.
The benchmark equity index ended Friday’s session down 0.9% from last week’s record-high close of 5,254.35. Health care and real estate posted the steepest weekly declines among sectors, while only energy and communication services closed higher.
Fed Chair Jerome Powell said this week that most policymakers believe it will be appropriate to start reducing interest rates at some point in 2024, though more evidence was needed that inflation is easing. Several other Fed officials echoed similar remarks throughout the week.
Last month, the central bank’s Federal Open Market Committee kept its benchmark lending rate unchanged, its fifth straight pause, and maintained expectations for three cuts this year. The FOMC started tightening monetary policy in March 2022 to tame inflation.
About 97% of traders are expecting the committee to leave its target rate unchanged at 5.25%-5.5% at its two-day meeting on April 30 and May 1, according to the CME FedWatch Tool.
In other news, nonfarm payrolls climbed by 303,000 last month, exceeding the Street’s views for a 214,000 gain, the US Labor Department said in a report on Friday. The unemployment rate came in at 3.8%, meeting market expectations.
US manufacturing activity expanded in March, while the services sector continued to grow, though at a slower sequential pace, data from the Institute for Supply Management showed.
This week’s economic calendar will feature they key official consumer and producer inflation reports for March, and an initial reading of consumer sentiment for this month. Minutes of the FOMC’s March meeting are scheduled to be released on Wednesday.
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