This Week in Financial Markets: 3.10.2024

1. Fidelity Cutting Jobs?!

Crazy, Fidelity let 700 people go. Of course, that is a fraction of a fraction of their workforce but it’s interesting because Fidelity quite literally never lets people go. Retaining employees is in their DNA. Hard to not believe this could be a sign of an accelerating trend.

2. Stocks vs. Rate Cut Expectations

Are stocks beginning to converge toward fading rate cut expectations? Throughout 2024 the number of expected rate hikes has been falling due to stronger than expected growth. Stocks had been highly sensitive to rate cut expectations until a notable divergence in January.

Looking at stock prices, it is easy to say ‘tech is back’. Looking at revenue growth? Not so much. The question is: Do stock prices soon reflect the lack of growth in the space, or do revenues rebound and begin to reflect the optimism of current valuations.

There doesn’t seem to be too many bullish catalysts on the horizon. Most investors are now in the soft-landing camp and rate cut expectations will only return if employment numbers start to deteriorate. It is important to remember, the rally over the past few months has been historic. A meaningful drawdown would be very normal.