The New York Stock Exchange ended sharply higher, with the main indices closing at the zenith on Friday, despite a PCE index that exceeded expectations... but perhaps 'not as bad' as some had feared.
It's all a question of psychology, and the conclusion is that W>all Street decided to ignore the situation and focus on the good quarterly results of Microsoft (+1.8%), SNAP (+23.4%) and Alphabet (+10%), which offset the disappointment of Meta on Wednesday and Intel on Thursday evening.

The Dow Jones gained 0.40%, the Nasdaq index gained 2.03% (+4.4% weekly) and the S&P 500 gained 1.02%, ending the week in contact with the 5,100 mark (+2.7% weekly).
The S&P and Nasdaq thus posted their best week of the year, after ending the worst since October 2023 or January 2022 with -3% and -5.6% respectively.

Alphabet (+10%) outperformed Nvidia, which jumped +6.2% (last Friday, the stock had collapsed -10%, pulverizing $200 billion in market capitalization).
Nvidia broke through the $2,000 billion market cap (at $2,200 billion), followed by Alphabet ($2,030 billion).
Other top performers of the day included Micron and Applied Materials +3%, Amazon +3.4%, Broadcom +3.8%, Datadog and KLA +5%
Intel was down -9.2% (disappointing forecasts for the 1st half of 2024), Dexcom -9.9%.


On the rates front, T-Bonds - which had just posted their worst levels of the year on Thursday evening - eased slightly with the release of the PCE inflation index (the gauge most closely watched by the FED), which proved disappointing.
The PCE came in at +2.7% in March, compared with 2.5% in February, with the underlying rate (excluding energy and food) holding steady at 2.8% month-on-month.
US inflation is therefore slightly higher than economists were expecting.
The Commerce Department also reports that US household spending rose by 0.8% in March compared with the previous month, while incomes rose by 0.5%.

US consumer confidence deteriorated more sharply than initially estimated in April, to 77.2 in 'final' terms, below the first estimate (77.9) and down sharply on the 79.4 level reached in March.
Households' assessment of their current situation deteriorated most sharply, to 79 from 82.5 last month.
The expectations component fell to 76 this month from 77.4 in March.

The easing in T-Bonds is only 'in line' with household confidence: the US '10-yr' is down 4.3pts to 4.6630%, while the '2-yr' is down just 0.5% to 2.993%.
The estimated probability of a rate cut in June, which was almost 64% a month ago according to CME Group's FedWatch tool, has fallen back to around 12% today.

Based on this barometer, expectations of a rate cut in September have fallen back to 44%, on a par with the scenario of a continuation of the 'status quo' (40%).
No rate cut is no longer the impossible scenario, whereas the consensus was still counting on 6 to 7 rate cuts this year (and a first easing in mid-March).

This is perhaps what is driving the dollar soaring against the yen, which disintegrated by over 1.75% on Friday to reach a new 34-year low of 158.40 (a decline of over 2.1% over the week).
This plunge in the Japanese currency should prompt the BoJ to intervene, as the -12.5% fall since January 1 against the greenback is becoming very worrying, and the volatility of the last 24 hours is frankly alarming.
With the yen so friable, the Bank of Japan's reiterated forecast of 2% inflation in 2024 seems untenable.


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