What’s likely to move the market

The financial markets are constantly evolving, and staying ahead of the curve can be challenging. Recently, the Dow Industrials dropped nearly 300 points, reflecting investor anxieties as they brace for the Federal Reserve’s upcoming rate decision. Scheduled for 2 p.m. ET today, this announcement will be pivotal in influencing market movements. CNBC’s senior economics reporter, Steve Liesman, will cover the news live, alongside hosts Kelly Evans and Brian Sullivan, who will dissect the market’s reactions.

As we delve into the current landscape, it’s essential to monitor the bond market closely. The U.S. Treasury yields are showcasing notable figures, signaling market sentiments and expectations. The 30-year Treasury bond yield stands at 4.89%, while the 20-year yield is slightly higher at 4.91%. The 10-year Treasury note yield sits at 4.39%, revealing how investors are pricing in future inflation and interest rate changes. Shorter maturities like the two-year Treasury yield currently yield 3.95%, with even shorter durations like the one-month T-bill yielding 4.18%.

Moreover, corporate bonds are generating significant yields. The SPDR Bloomberg High Yield Bond ETF (JNK) is yielding 6.63%, while the iShares iBoxx High Yield Corporate Bond ETF (HYG) is yielding 5.85%. For risk-tolerant investors, the BondBloxx CCC Rated USD High Yield Corporate Bond ETF (XCCC) offers an enticing yield of 10.49%. This landscape serves as a wake-up call, drawing attention to what could move the market in the upcoming trading sessions.

Energy stocks have emerged as an unexpected bright spot amidst increasing market turmoil. The S&P 500 has seen energy as the only positive sector recently, largely due to escalating concerns regarding Iran’s potential influence on oil prices. The Strait of Hormuz is critical for global oil transportation, and any disruption here could exert significant upward pressure on prices. In the last five trading sessions, both West Texas Intermediate (WTI) and Brent crude futures have surged around 15%, supported by heightened demand and geopolitical tensions.

Natural gas futures and gasoline have also shown remarkable resilience, with increases of about 10% within a week. Companies like EQT and Apache have reaped substantial rewards; EQT recently hit a new high. Despite its recent successes, APA remains 40% lower than its peak reached last summer. Other energy giants like Exxon Mobil, Valero, and Phillips 66 experience ups and downs, reflecting the volatile nature of the sector. For example, while Exxon is up 6.3% this week, it remains 10% below its recent high.

Conversing about the energy sector inevitably leads to discussions around regulatory impacts, particularly with President Donald Trump’s recent bill. CNBC’s Emily Wilkins plans to evaluate potential winners and losers within this context, especially since older energy plays have shown signs of resilience. Conversely, the clean energy sector, led by solar energy stocks, appears to be experiencing turbulence. The Invesco Solar ETF (TAN) dropped 9% on Tuesday alone, highlighting a significant downturn as it struggles 30% from its June 2024 high.

Companies engaged in solar technology haven’t fared any better; Sunrun’s shares plummeted 40%, while SolarEdge and Enphase also experienced considerable drops in value. This indicates a troubling trend for businesses that might have initially benefited from the clean energy push but are now contending with economic repercussions and regulatory shifts.

Moreover, the ‘Big Seven’ technology stocks are experiencing challenges as well. Tesla falls 3.88% and is now down 35% from its 52-week high reached in December. Apple has taken a 1.4% hit and is 25% off its post-Christmas peak. Amazon is down 11%, while Alphabet has retraced 15% from February highs. Nvidia and Microsoft have shown some relative stability but feel pressure as they approach previous highs. In contrast, Meta Platforms has declined 6% from its February high, showcasing the inherent volatility across tech stocks.

As we anticipate the Federal Reserve’s decision, it’s important to recognize the broader economic implications of interest rate fluctuations. Investors will likely adjust their portfolios accordingly, resulting in shifts across various sectors—some gaining and others facing steep declines. The bond market will also feel the impact, with yields likely to adjust based on the Fed’s projections about future economic growth, inflation, and employment.

In conclusion, as market dynamics continue to unfold in tandem with real-world events, understanding what could influence market movements is crucial. Investors should closely monitor the Federal Reserve’s decisions, bond yields, and emerging trends within energy and technology sectors. With heightened volatility and uncertainty in play, being well-informed will empower investors to make strategic decisions, navigate risks, and ultimately find opportunities within the market maze. Your financial future might hinge on today’s choices, reminding us all of the importance of vigilance in the ever-changing economic landscape.

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