- Russell2000 (US2000) rallies 2.5% awaiting change in Fed policy
- Money markets are increasing dovish bets
- Tesla (TSLA.US) loses after higher than expected price of debut Cybertruck
- Pfizer (PFE.US) shares near 2020 lows after abandoning research into an obesity drug
The money market is now pricing that the Fed will cut interest rates in 2024 by a total of 125 basis points. A cut in March is currently priced at 70%, just yesterday it was 46%. Overall, Fed chair Powell tone was quite mixed today, but we saw some dovish remarks. The fed is probably done with increasing rates and, according to Powell, the economy is on a good path to gain 2% inflation target without cooling. At the same time, Powell expects that demand and output will slow in 2024. Despite that, we can see higher volumes and bullish activity on Russell 2000 (US2000) index where positive change in Fed policy is most highly anticipated. Better credit conditions may support growth for smaller US businesses.
Source: xStation5
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Bullish reaction in US2000 futures may be explained due to awaited better credit conditions for smaller, US business (after expected in 2024 Fed rate cuts). The index was very weak in 2022 and most part of 2023, gains 'only' 5.5% YTD after today rally in compare with 46% rally in Nasdaq 100 and 16% for S&P 500. We can see that a three times buyers were very active near 16,500 points level, but sellers increased activity at 2000 points resistance zone. In a basic scenario of 2000 points retest, the index may gain 8%.
Source: xStation5
News from companies
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Tesla (TSLA.US) loses today 2.5% after the price of the electric Cybertruck was set at $60,990, more than 50% higher than Musk's early estimates suggested, in 2019. Analysts say the car will attract only a few wealthy buyers, with no chance of wider popularity at current prices and monetary policy;
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Reuters pointed out that Google (GOOGL.US) is pushing for antitrust action against Microsoft (MSFT.US) in the UK cloud market. Google has called on the antitrust authority to take action against Google Cloud's competitor, Azure, saying business practices have left the rivals at a disadvantage. Microsoft's shares are losing 1.7% today and Google is down 1%.
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Pfizer (PFE.US) has abandoned a plan to study an obesity drug that some analysts said would improve profitability in the wake of Novo Nordisk's box office success. The drug giant announced that it will not continue studies of a twice-daily version of the oral weight-loss drug Danuglipron. Most of the patients involved in the mid-stage study dropped out due to a high rate of side effects, such as nausea and vomiting.
