The stumbling of the bulls makes sense

The Fed outlook and geopolitical tensions could mean there's more volatility ahead

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Happy Monday to the smartest corner of the internet.

Stocks took a hit last week, but maybe it was about time that happened.

A cocktail of headwinds could keep indexes down for the near future — more on that below.

After that, we’re covering Tesla’s stock woes, Nvidia’s market cap crash, and record CEO pay.

*At a glance:

*Data as of Sunday 8:00 p.m. ET

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Markets’ rough patch makes sense

Made with AI by Opening Bell Daily

Stocks enter today’s trading session carrying little momentum.

In the last week:

  • The S&P 500 fell 3%

  • The Nasdaq Composite fell 5.5%

  • The Dow stayed flat

Notably, the S&P 500 has dipped below its 50-day moving average. When that happens, the index typically declines another 5% soon after.

We saw this once last year and twice in 2022.

Stocks have mostly crushed it to start the year, but that’s largely happened on expectations for the Fed to slash interest rates.

This time last month, traders saw more than 55% odds of a cut in June. That’s now hovering at about 16%, according to CME.

So it shouldn’t be that surprising equities are trending lower — it seems investors are finally coming to terms with the cocktail of bearish headwinds.

The economic data has simply remained too strong for too long.

Despite the Fed’s best efforts, a slate of key numbers have clocked in hotter than expected:

  • March retail sales

  • March CPI

  • February CPI

  • January CPI

Plus, the labor market has remained far more resilient than anticipated.

Larry Tentarelli, the chief technical strategist of Blue Chip Daily, said he sees little chance the Fed cuts rates in June or July unless the unemployment rate spikes or the job market “falls off a cliff.”

“The elephant in the room is the bond market reducing Fed cut expectations all the way back to September,” Tentarelli told me.

He shared that he’s currently holding more cash than usual, which is what JPMorgan’s Marko Kolanovic recommended last week.

He also reduced some of his stock holdings in tech, including Nvidia.

Tensions in the Middle East, meanwhile, have introduced further uncertainty for investors.

Separate from humanitarian and political consequences, any conflict involving Iran threatens global crude supply.

That could push oil prices higher and inject more jitters into markets.

Here’s what to watch this week:

  • Meta earnings Wednesday

  • Alphabet and Microsoft earnings Thursday

  • First-quarter GDP estimate Thursday

  • March PCE data on Friday

Better-than-expected results for any of these items could buoy stocks.

After all, upbeat earnings and a growing economy do imply solid footing for companies and their shareholders.

That said, it’s unlikely any of the above bullets will sway central bank policy or improve relations between Iran and Israel.

…which means investors may want to buckle up for extended volatility.


  • Nvidia just saw its worst day since March 2020. Shares of the chip giant dropped 10% Friday, wiping out $212 billion in market value. (MarketWatch)

  • Tesla stock is down 40% in 2024. Shares have tumbled amid layoffs, price cuts to vehicles, recalls, and controversy over Elon Musk’s compensation. (Bloomberg)

  • The bitcoin network completed its fourth-ever “halving.” Miners will now get half the reward as before, raising concerns over smaller companies’ lower revenue and an industry-wide consolidation. (CNBC)

Rapid-fire headlines:

  • New lawsuit alleges SEC illegally surveils Americans via stock market data (Fox)

  • CEO pay hit a new record in 2023 (Barron’s)

  • US lawmakers passed a bill to effectively ban China-owned TikTok (WSJ)

  • Ukraine is set to receive another $60 billion in US aid (Bloomberg)

  • Martin Wygod, a Wall Street legend and racehorse breeder, died at 84 (NYT)

  • A preview for this week’s tech earnings (Business Insider)

Last thing:

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