US stock indices continued their upward trajectory on Tuesday, fueled by easing bond yields and strong performances from companies like Nvidia and La-Z-Boy. Despite a dip in retail sales, investors are hopeful that a slowing economy might lead to interest rate cuts by the Federal Reserve.
Federal Reserve Chair Jerome Powell has tested positive for COVID-19 and is currently working from home. He is experiencing symptoms and following CDC guidelines by staying away from others. Powell’s positive test comes after a trip to Europe, where he appeared on stage at an event with Dutch central bank president Klaas Knot. Powell had previously tested positive for COVID-19 in January 2023. Financial markets showed little reaction to the announcement, and the next scheduled Fed policy meeting is not until June 11-12.
This Fox News Politics newsletter provides comprehensive coverage of the latest political developments, including updates from Washington D.C. and the 2024 campaign trail. Notable stories include former President Trump’s appearance at a Minnesota GOP convention, a State Department warning for Americans traveling overseas, and a House representative’s push to end the Federal Reserve. Senator Fetterman’s comments about Democratic infighting have also引起分歧， with a fellow Democrat expressing disapproval. Other notable stories include developments in the Planned Parenthood abortion ban challenge, Supreme Court Justice Alito’s interview with Fox News, and a ‘cult-like’ faith controversy surrounding a Catholic NFL star.
Representative Thomas Massie has introduced a bill in the House to abolish the Federal Reserve, which has been the central banking system of the United States since 1913. The bill, H.R. 8421, seeks to end the Board of Governors of the Federal Reserve and its banks, as well as repeal the Federal Reserve Act. Massie argues that the Federal Reserve is responsible for the high inflation and devaluation of the dollar, and that Americans would be better off without it. The bill has been co-sponsored by several other Republican representatives.
A new survey from the Federal Reserve Bank of New York reveals that US renters are increasingly pessimistic about their ability to ever own a home. Only about four in 10 renters believe they will be able to buy a home, the lowest level since the survey began a decade ago. This pessimism is particularly pronounced among younger renters, with half of those under age 50 not believing they will be able to buy a home. The survey also found that expectations of home-price growth have reaccelerated after falling last year. Renters expect home prices to rise at a 2.7% annualized rate over the next five years, roughly in line with inflation expectations.
After years of minimal returns, fixed income investments are experiencing a resurgence as benchmark rates rise. This change is driven by the Federal Reserve’s interest rate hikes, which have pushed yields on US Treasuries to over 4%. Investors are now earning substantial annual interest payments from government debt, and higher yields offer protection against future inflation. Various sectors, including buyout firms and money-market funds, are drawn to the stability and higher returns of fixed income investments. Despite concerns about inflation and the US deficit, experts predict this trend will continue, leading to a more normal fixed-income market with increased demand for bonds and other income-generating investments.
CNBC’s Jim Cramer believes that investors need weaker labor market data on Friday to spur a rally in stocks. He argues that inflation, not interest rate expectations, is the primary driver of market action. Cramer criticizes Wall Street’s obsession with the Fed’s potential rate cut and emphasizes the impact of economic data on stock performance. He expresses frustration with the lack of control companies have over their own destiny in this environment and suggests that the stock market has become a speculative plaything.
The fight against inflation has been going well for the Federal Reserve and economy, but small business owners remain unconvinced about the progress being made. A recent CNBC|SurveyMonkey Small Business Survey found that only 24% of small business owners believe inflation has reached a peak, while 75% expect it to continue rising. This frustration is reflected in a decline in small business confidence in the Fed, with only 31% of business owners now saying they have confidence in the central bank.
Despite a positive market reaction to Fed Chair Powell’s comments after the FOMC meeting on Wednesday, in which he all but ruled out another rate hike this year, small business confidence in the Fed has declined. Last quarter, a little over one-third (35%) of business owners said they had confidence in the Fed. That’s not fallen back to 31%, where it was in Q2 of last year.
Inflation remains a top concern for small businesses, even as the overall economy remains strong. Over one-quarter (27%) of business owners describe the economy as “excellent or good,” which has not trended lower even as inflation fears have picked back up. It’s also notably up from 21% in the year-ago quarterly survey.
The CNBC|SurveyMonkey Small Business Confidence Index was unmoved quarter-over-quarter, at 47 out of 100, and up one point from Q2 of last year. The data is consistent with other recent small business survey findings, with both the Goldman Sachs’ 10,000 Small Businesses Voices survey and the CNBC survey finding that a majority of small business owners are facing inflationary pressures. Inflation will loom large in how America’s small business owners tilt in the presidential election. Inflation is the No. 1 issue over which small business owners say they will vote, with 63% of survey respondents citing it, followed by economic growth at 61%.
Tom Lee of Fundstrat Global Advisors believes the Federal Reserve may be softening its aggressive interest rate hiking stance. Recent data showing disappointing consumer spending, such as Starbucks’ lackluster same-store sales, suggests that rising costs are squeezing household budgets. Additionally, Fed Chair Jerome Powell’s comments expressing preparedness to respond to labor market weakness may signal a shift in the central bank’s policy stance. Lee predicts a good chance that interest rates have reached their peak and sees a positive outlook for stocks if inflation improves as expected. Small-cap stocks and the technology sector, particularly those benefiting from artificial intelligence, are poised to excel in the coming months.
Despite the Federal Reserve’s decision to hold rates steady, consumers carrying credit card balances face continued high interest charges. To mitigate these expenses, experts recommend exploring options such as negotiating lower rates with card issuers, utilizing zero-interest balance transfer cards, or consolidating high-interest debt with personal loans.
