Investors are adjusting their expectations for a rate cut in March as the labor market continues to show resilience. Federal Reserve Chairman Jerome Powell signaled that an interest rate cut is not on the table in March, following the central bank's decision to maintain rates at their highest level in 23 years.
Louis Navellier, President of Navellier & Associates, predicts that the Fed will start cutting its key interest rates in May, with additional cuts expected in June, July, and September. Traders now anticipate a 21% chance of a rate cut in March, down from 46% the previous week, according to the CME FedWatch tool.
Next week, all eyes will be on US Treasury Secretary Janet Yellen's testimony before the Senate Banking Committee, where she is expected to address concerns stemming from last year's regional banking crisis.
The surprise $252 million profit loss at New York Community Bancorp in the fourth quarter has reignited concerns about the health of the US financial system, putting regional banks back in the spotlight.
Meanwhile, in the technology sector, strong earnings reports from Meta Platforms and Amazon boosted technology stocks on Friday. Meta Platforms saw its shares surge 20.3% to a record high of $474.99 after reporting higher profits, issuing its first-ever cash dividend, and announcing a $50 billion stock buyback. Amazon shares also rose by 7.9% after the e-commerce giant reported robust profits for the latest quarter.
Other technology stocks experienced gains as well, with Nvidia shares jumping around 5% to a record high of $661.57. Microsoft shares rose 1.8% to a new closing high of $411.22. Despite these technology stock gains, the broader market was not immune, as the equally weighted S&P 500 index, which assigns equal influence to each stock, fell by 0.8% on Friday. The Russell 2000 index, tracking small-cap US stocks, also declined by 0.5%.
As trading day stabilizes, market levels may see slight changes. Investors remain watchful for further developments, especially given the ongoing economic uncertainties and potential impacts on the financial system.