Stock Market Update Thursday May 2, 2024

Stock Market Update Thursday May 2, 2024 Equity markets reversed yesterday's late-day selling pressure and staged a strong rally, with the S&P 500 surging nearly 1% and the Nasdaq 100 experiencing a 1.3% advance.  However, a clearer picture of the market's near-term trajectory will likely emerge after the release of tomorrow's nonfarm payroll report, a key indicator of economic health and potential influence on future Fed policy decisions.

Away From Stocks: The US Treasury bond market continued to react positively to the Federal Reserve Chair Jerome Powell's comments on Wednesday, which were perceived as dovish. This drove two-year Treasury yields down by 17 basis points to settle at 4.87% within the last two days. In the commodities market, West Texas Intermediate (WTI) crude oil remained below $79 per barrel. Gold prices also dipped, settling at $2,302 per ounce. Finally, the VIX volatility index finished at 14.6, reflecting a slight decrease of less than one point.

The Federal Reserve's balance sheet saw a significant reduction in its portfolio of interest-bearing assets, with a $24.4 billion decline in Reserve Bank credit pushing the total down to $7.343 trillion. This marks a substantial decrease of 17.7% from the peak observed in March 2022, and represents a $84 billion reduction over the past four weeks alone. In a policy shift, the Fed intends to slow down the pace of its roll-off of Treasuries, setting a new monthly ceiling of $25 billion starting June 1st. This is down from the current $60 billion cap. Meanwhile, the maximum roll-off pace for mortgage-backed securities will remain unchanged at $35 billion per month.

These time pivots are known before the stock market opens at 9:30am

Tomorrow's Time Pivot's Today, However They May Change in The Morning When The Markets Open at 09:30am