The Federal Reserve may have new incentives in the second quarter to cut interest rates more this year.
Tony Dwyer of Canaccord Genuity believes a deteriorating labor market and slowing inflation will ultimately force the Fed to act.
“I’m not saying they need to go back to zero, but they need to be more aggressive,” the company’s chief market strategist told CNBC’s “Fast Money” on Thursday. “One of the most aggressive topics I talk to customers about is how bad the incoming data is.”
Dwyer contends that declining participation rates in employment surveys are skewing Bureau of Labor Statistics jobs report data. The next monthly job posting is due on Friday.
“It’s not like they’re manipulating the data. The conspiracy theories are all mixed up with this stuff. It’s really that they don’t have a good capture mechanism. So the revisions are significant and most of them have now been negative,” he told Dwyer. “Our focus now is to make sure the rate cuts are what you need.”
At the Federal Reserve’s rate meeting in March, officials tentatively planned to cut rates three times this year. These would be the first cuts since March 2020.
Dwyer expects the tariff reduction to have an impact Finance, Consumer Discretionary, Industrial companies And Healthcare Stocks are on the rise. The groups are positive this year.
“We demand that we address the expanding theme of weakness rather than simply adding to the mega-cap weighted indices. The top 10 stocks still account for 33.7% of the total SPX.” [S&P 500] Market capitalization,” he wrote in a recent note to clients. “History shows that it is historically high and will not last forever.”
According to Dwyer, market performance will be significantly more balanced by the end of this year by 2025.
“It’s not just the Mag 7”
“It results from an expansion of participation in profit growth. It’s not just the Mag 7,” he told Fast Money.
The “Magnificent Seven”, consisting of alphabet, Amazon, Apple, Metaplatforms, Microsoft, Nvidia And Teslais outperforming the broader market this year – up 17%, while the S&P 500 is 10% higher.
The S&P 500 closed at a record high on Thursday, posting just its strongest first-quarter gain in five years.
“When you’re so overbought and so extremely uptrending, you just want to wait for a better opportunity,” Dwyer said. “Our view is that this coincides with worsening employment data and falling interest rates. You have to worry about the economy. I want to get in there.”
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2024-03-31 21:00:01
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