Tuesday was a red-letter day, and we can thank the Treasury Secretary. Janet Yellen offered her economic thoughts, but nobody took the bait. Instead, a wave of selling consumed everything.

S&P 500

Traditional haven sectors were the best, but every sector finished in the red. Energy (XLE) took the most significant hit, followed by Consumer Discretionary (XLY).

Eli Lilly and Co, (LLY) stood out because everyone is trying to lose weight with pills.

Market Breadth

Decliners led advancers almost six to one on the New York Stock Exchange (NYSE). 

The down volume led the up volume by almost seven to one on the NYSE.

Market Breadth	NYSE	NASDAQ
Advancers	495	1,168
Decliners	2,334	3,099
New Highs	64	51
New Lows	35	121
Up Volume	502.37 million	1.76 billion
Down Volume	3.55 billion	3.42 billion

The NYSE failed to clear its 50-day moving average, and while it's early, it is also a yellow flag.

Bond yields continue to frustrate the equity market. The slow and steady march has become ominous. 

Remember the Weed Trade?  It's back on reports of rescheduling that falls short of legalization but is far less draconian.

Real people are in real trouble.

When I was a kid growing up in Harlem, McDonald’s was a periodic treat, and for lower-income households; it's becoming that way again. Yet the Federal Reserve probably doesn’t know about this or care. They are working with aggregate data that is still “too strong.”

It stands to reason that if ‘Mickey D's’ is out of reach for more people, Starbucks is a million miles away.  That was the situation in the last quarter when same-store sales in North America were -3.0%. Management hiked prices by 4%, but transactions plunged 7.0%.

This underscores why Consumer Confidence, particularly Expectations, plunged.

Today’s Session

This is the most anticipated FOMC gathering in a very long time in part because there is serious confusion and honest debate over the direction of the economy.  There is no debating the uptick in the pace of inflation.

The re-acceleration is real.

Moreover, inflation expectations have also turned higher.

So, we are hoping to learn, and the market is bracing for answers:

Will April showers bring May flowers?

My friends at Bespoke put out a couple of tweets I think are important to share this morning.  I think the market will remain selective and the bias shifts higher once the street gets used to higher for longer on Fed funds rates. 

Already the realization hasn’t’ come close to triggering the damage seen last summer.

Comments

Your commentary today helps me understand why Amazon could post such great Qrtly numbers and the stock price plummeted. I'm new to Option Trading and A Payne's Ed Student. I'm also a 69 y/o Working Accountant. I was befuddled until readng your comments. Thanks. Mark Peterson on 5/1/2024 10:06:35 AM

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