Sticky Inflation Means Higher For Longer And The Magnificent 7 Are Out Of Gas
Stocks rallied hard on Tuesday in the wake of the February CPI – but it didn’t make any sense. The CPI came in slightly hotter than expected and this sticky inflation has taken a May rate cut off the table. In fact – as you can see in the chart above by Jim Bianco – the probability of a June rate cut is now only slightly above 50%. As markets have digested the report, all of Tuesday’s gains have been given back and the S&P is currently trading below where it closed on Monday (5,118).
After Nvidia’s (NVDA) blow off top and hard reversal last Friday, Microsoft (MSFT) briefly took the lead this week breaking out above $420 yesterday – but it’s back below that level this morning. The market has been driven higher by big cap tech but QQQ broke below its 21 DMA this morning – a level active traders like Scott Redler won’t hold below.
On Monday the market will start looking ahead to Wednesday’s Fed Meeting. A hawkish Fed would likely send stocks significantly lower.