Date of release of the report: 5 May 2024
Report title: "Guoxin Securities-A quick overview of the US stock market-US stocks are expected to return to rising status"
Securities analyst: Wang Xueheng
Securities investment consulting practice qualification certificate code: S0980514030002
Securities analyst: Zhang XiPokercashgamestrategy, CFA
Securities investment consulting practice qualification certificate code: S0980522040001
Core viewpoints
Fed FOMC meeting decides to slow down the pace of table contraction
On May 1, the Federal Reserve announced a new round of monetary policy decisions, on the one hand, to maintain the federal funds rate target at 5.Pokercashgamestrategy.25% Mutual 5Pokercashgamestrategy.5%, on the other hand, it will lower the monthly Treasury bill redemption limit from US $60 billion to US $25 billion (that is, slow down the pace of the contraction table), and keep the MBS redemption limit at US $35 billion.
In the FOMC statement, the Fed said: 1) there is a lack of new progress in the recent slowdown in inflation; 2) the economic outlook is highly uncertain and remains highly concerned about inflation risks.
Combined with the performance of asset prices, the market holds a more positive and optimistic attitude towards this FOMC meeting. After the meeting, 2-year and 10-year yields fell rapidly, and the S & P 500 stabilized and counterattacked.PokercashgamestrategyWe believe that although this FOMC meeting did not cut interest rates, the decision to slow down and shrink the table is a groundwork for future monetary policy easing and generally sends an unexpected dovish signal to the market.
The market is more likely to cut interest rates as US employment data weakens in April.
On May 3rd, the latest employment data for the United States were released. Among them, the number of new non-farm payrolls was + 175000 (consensus + 235000, front value + 315000); unemployment rate 3.9% (consensus 3.8%, front value 3.8%); hourly wage year-on-year + 3.9% (consensus + 4%, front value + 4.1%). Month-on-month + 0.2% (consensus + 0.3%, front value + 0.35%).
Although the employment data generally show signs of marginal weakness, the market is optimistic about the interpretation of the data from a monetary policy perspective. After the release of the data, 2-year / 10-year Treasury yields fell further; the probability of a rate cut in 2024 increased by about 12 per cent.
Stock price performance: the market fluctuates, the small market rises
This week, the s & p 500 fluctuated below its 60-day moving average, closing up 0.5% in a week. In style, small market value (Russell 2000 value + 2%) > small market growth (Russell 2000 growth + 1.3%) > market growth > market value.
On the plate side, 13 industries rose and 11 industries fell this week. The industries leading the increase were technical hardware and equipment (+ 6.1%), automobiles and auto parts (+ 6.1%), public utilities (+ 3.6%), pharmaceutical biotechnology and life sciences (+ 2.2%) and retail (+ 2%). The sectors with the highest declines were consumer services (- 4%), energy (- 3.3%), retail of food and major supplies (- 1.4%), diversified finance (- 1.1%) and banks (- 0.7%).
Investment advice: us stocks are expected to return to the rising stage
This week, the S & P 500 rebounded to the 60-day line after the shock, and the market mood was optimistic. From the perspective of corporate earnings, corporate EPS expectations have risen steadily during the expansion period; from the perspective of macro data, the first signs of weakening employment data will help to increase the certainty of the Fed's monetary policy turning loose; and directly looking at monetary policy, although the Fed has not cut interest rates this week, it has begun to slow down and shrink its table, reflecting its internal easing tendency. To sum up, we believe that US stocks are expected to return to rising status in the coming days.