Here's What's Happening in Markets: May 2

Here's What's Happening in Markets: May 2

Markets rise after Fed holds rates steady, and investors await Apple earnings.

Kristin
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SVP Content/EIC
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Reviewed by: etf.com Staff
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Edited by: Ron Day

Markets are on the rise midday Thursday after the Fed's decision yesterday to hold rates steady. 

SPY, the SPDR S&P 500 ETF Trust jumped just under half a percentage point as investors let anxieties about rates subside. DIA, the SPDR Dow Jones Industrial Average ETF Trust was also in the green by midday, rising over 0.6%.

Investors weren't expecting a change in interest rates, and now are wondering when and if to expect cuts. In his speech Wednesday, Fed Chair Jay Powell stated the Federal Reserve "does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent."

Powell highlighted the "lack of further progress" towards the Fed's inflation goal as inflation remains persistent and stubborn. While investors had originally hoped for 6 rates cuts this year, that optimism has now faded. According to the CME Fed Watch Tool, markets don't anticipate rate cuts until September at the earliest. 

The "higher for longer" rate environment has been particularly painful for fixed income investors who piled into Treasurys in 2023. 

The largest treasury ETF, TLT, the iShares 20+ Year Treasury Bond ETF, has been especially hard hit as anxieties around rate cuts have caused the share price to whipsaw. Longer term bond yields rose Thursday after the Fed's decision, and TLT was little changed.

TLT VS. TBIL Total Return 

Source: etf.com

Shorter term Treasury investors saw funds rise as bond yields dropped as the Fed Chair noted the strength of the U.S. economy. TBIL, the U.S. Treasury 3 Month Bill ETF was little changed. 

After the bell, investors will look to Apple Inc. which is set to report quarterly earnings. It's one of the last members of the Magnificent Seven to report; investors will have to wait until the end of May before NVIDIA Corp. takes center stage. 

QQQ, the Invesco QQQ Trust which tracks the tech-heavy Nasdaq rose by midday Thursday, jumping more than half a percentage point. As investors awaited Apple earnings, MAGS, the Roundhill Magnificent Seven ETF which holds the Mag 7 in its fund, jumped about the same.

On Friday, investors will look to the the April jobs report for clues about the strength of the U.S. economy. 

Kristin Myers is an award-winning journalist, who covers business and finance news. She is the current Senior Vice President of Content and Editor in Chief of etf.com. Kristin was most recently the Editor-in-Chief of the economics website The Balance, and an on-air anchor and reporter at Yahoo Finance. 

She hosted Yahoo Finance Live daily, providing afternoon coverage and reporting on markets, and the economy in the hours before the final bell. She was also one of the creators and hosts of “A Time for Change,” a weekly program that explores race, diversity, and inclusion in the world of business, finance, and politics. 

Earlier in her career, Kristin helped launch Al Jazeera America, where she produced high-profile guest segments and was part of field teams for special coverage, including the protests in Ferguson, and the funeral of Nelson Mandela in South Africa.

She has also worked with other news organizations including Bloomberg News, MSNBC, and others, in the U.S. and abroad.