Stocks slip as investors turn cautious ahead of Fed meeting
Stocks gave up early gains on Monday as confidence that economies are recovering rapidly was overshadowed by caution over the speed of the market’s rally and ahead of a U.S. Federal Reserve policy meeting.
The start to the week was quiet as investors refrained from taking on large positions before a two-day Fed meeting that will begin on Tuesday and the impending release of quarterly gross domestic product numbers for the United States.
Investors have remained ebullient in recent weeks, with Wall Street hitting another intraday record high on Friday and European shares not far off their own record highs.
But there was some limited selling on Monday in Europe.
Wall Street futures pointed to a weaker open after Friday’s gains.
Asian shares rallied, however. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) reached its highest since March 12, despite a late selloff in Chinese shares.
That helped offset the falls in Europe and lift the MSCI world equity index (.MIWD00000PUS), which tracks shares in 49 countries, by 0.16%.
Stocks — as well as most other risk assets — are basking in a massive rally. The MSCI world index has suffered only three down months in the past 12 and is up nearly 5% this month and 9% for the year as investors bet on a rapid post-pandemic economic rebound turbocharged by vast government and central bank stimulus.
Analysts, however, say stocks look a little overvalued and that the rally will run into hurdles after setting such a lightning pace and with so much of the economic recovery and fiscal stimulus splurge already priced in. read more
“The real crux of the issue, however, is what’s in the price. The year-to-date rally has increasingly eliminated upside to our targets,” noted Andrew Sheets, a strategist at Morgan Stanley…..read more