Markets Daily: Powell's message

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Markets Snapshot S&P 500 Futures 5,684 +0.26% WTI Crude Oil Futures 66.52 -0.57% China's CSI 300 Index 4,010.17 +0.06% Borsa Istanbul 100 Index 10,156.57 -5.98% US 10-Year Treasury Yield 4.285% +0.002 Market data as of 06:11 am EST. View or Create your Watchlist Market data may be delayed depending on provider agreements.

Five things you need to know

Russia's Vladimir Putin refused to give Donald Trump a 30-day ceasefire in Ukraine, agreeing only to limit attacks on Ukraine's energy infrastructure while demanding an end to the flow of weapons to the neighbor his military invaded. The two leaders agreed to start negotiating toward a ceasefire. Turkish authorities detained Ekrem Imamoglu, President Recep Tayyip Erdogan's most prominent rival, in a widening crackdown on opposition that triggered a selloff in the country's markets. US stock-index futures posted small moves before the Federal Reserve's policy decision today. The Fed is expected to hold interest rates steady and its forecasts should give investors more insight into the outlook for the economy.  Morgan Stanley is planning to cut about 2,000 employees this month in the first major workforce reduction under CEO Ted Pick. The layoffs were set in motion before the recent market tumult, according to people familiar with the matter.  The Bank of Japan signaled worries over the potential impact from US tariff policies and kept its benchmark rate unchanged, hinting that it's not in a rush to hike for now.

Powell's message

As the Federal Reserve wraps up its two-day meeting today, bond investors will look for Chair Jerome Powell to hit just the right notes in his comments to keep up the momentum behind a rally in the $29 trillion Treasury market. US government debt has returned 2.4% this year, pushing yields to their 2025 lows as the equity market sold off and Donald Trump's tariff agenda led to forecasts for less economic growth and a resurgence of inflation. While Powell said "the economy's fine" two weeks ago, traders will scrutinize his comments and officials' revised forecasts, known as the dot-plot, for cracks in that view. "The rates market is willing and able to reassess the outlook very rapidly," said Ed Al-Hussainy, rates strategist at Columbia Threadneedle Investment. "Not a lot of data has changed between December and today, but what has changed is the range of outcomes."  While markets imply essentially no chance the Fed lowers interest rates this month, uncertainty has been increasing about the rest of the year. As of yesterday's close, traders were pricing in about two quarter-point rate reductions by the end of 2025, down from about three a week ago. Taken together, moves in the short-term futures and options markets appear to show more hedging by traders who see the possibility that the Fed keeps rates on hold for at least the first half.  The central bank's economic projections are viewed as likely to show a tempered growth outlook while anticipating sticky inflation. The two-year Treasury note yield reached its low for the year, 3.83%, on March 11. The last stage of its decline from 4.42% in mid-January was driven in part by White House comments that seemed to accept a growth slowdown as a short-term consequence of its deep spending cuts. The S&P 500 index went into a correction. For the stock market, the risk is that the Fed won't be dovish enough. Inflation has proved stubborn and tariffs could further reignite prices, forcing the central bank into caution. The typical pattern of Fed response is to actually see a solid change in the data, which will then lead to more forceful action. Yet that might only happen later this year.  "Traders appear to have gotten too dovish on the Fed," say Macquarie strategists Thierry Wizman and Gareth Berry. —Liz Capo McCormick, Michael Mackenzie and Michael Msika

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On the move

Tesla is gaining 3.8% in premarket trading after the electric-vehicle maker won approval in California to begin carrying passengers in its vehicles in a step toward ride-hailing services. Cantor Fitzgerald upgraded the stock to overweight from neutral.  Meta Platforms is little changed after Cathie Wood's Ark Investment Management cut its stake in the Facebook owner for the first time in about a year. The move comes as the stock tumbled into negative territory for the year yesterday, the last of the so-called Magnificent Seven stocks to lose its year-to-date gain.  Autodesk shares may be active. The Wall Street Journal reported that Starboard Value, which has urged a shake-up at the creative software company for about a year, is preparing to start a proxy fight.  Gilead Sciences, a maker of HIV medicines, drops 2.9% after the Journal reported that US officials are weighing cuts to federal funding for domestic HIV prevention. Swedish defense contractor Saab sinks 6.6% from a record high as Danske Bank double-downgrades the stock to sell. Saab faces the challenge of building out capacity quickly enough to "grasp its fair share" of higher defense spending, the bank says. General Mills is slated to report third-quarter results before the market opens, with Citi analysts expecting the packaged-food company to lower its full-year forecast as trends for snack bars and cereal weaken.  —Subrat Patnaik

Turkish markets plunge

The plunge in Turkish markets today reflects concern that President Recep Tayyip Erdogan's widening political crackdown could see the country's recent investor-friendly economic policies rolled back. The lira tumbled to a record low, the nation's stocks dropped so abruptly they triggered a trading halt, and borrowing costs surged as investors dumped the government's debt. The early-morning detention of Ekrem Imamoglu, the popular mayor of Istanbul, served up a reminder of the uncertainty involved in investing in Turkish assets and recalled past crises, when Erdogan's unorthodox economic policies contributed to sharp selloffs in the lira. "This is a bit of a shock to the system — the trend, at least recently, has been toward greater stability, whether that be economic or political," said Nick Rees, the head of macro research at Monex Europe in London. —Ugur Yilmaz, Tugce Ozsoy and Srinivasan Sivabalan

Kingmaker no more

Nvidia CEO Jensen Huang is losing his Midas touch in the stock market. A year ago, when the euphoria about AI was in full force, Huang's name dropping of customers and partners at the chipmaker's GTC conference sparked a rally in a number of the stocks, including Dell and Synopsys. But similar mentions in his keynote address yesterday were met with shrugs. Take GM. Minutes after Huang said Nvidia will help the automaker develop self-driving vehicles, GM shares sank to a session low, swept up in the broader market downdraft. It ended the day down 0.7%. A wireless project with T-Mobile and Cisco Systems that Huang announced was also met with investor apathy. The trading shows how the mood has changed as the market slides while President Donald Trump's trade war darkens the economic outlook. On top of that, tech stocks have been dragged down by growing doubts about when, if ever, their massive AI investments will pay off.  "This is more representative of the tape and the macro environment and the market psychology," said Michael O'Rourke, chief market strategist at Jonestrading. "They were pretty excited about just about anything last year — and this year they're a lot more cautious and we're seeing selloffs rather than rallies." — Jeran Wittenstein and  Carmen Reinicke

China warning

One of this year's hottest stock markets is at risk a major pullback soon, according to Bank of America. The gains in Chinese equities look similar to those in 2015, which preceded a big selloff, strategists led by Winnie Wu warned clients today.  "There are quite some fundamental similarities between the current cycle and 10 years ago, with the economic rebalancing cycle and policy cycle," the strategists wrote, adding that "a multiple-expansion-driven rally could be vulnerable."  BofA's caution stands out in a wave of bullish bets that has swept across Chinese markets this year, fueled by DeepSeek's technological advancements and Beijing's determination to spur the economy.  —Charlie Zhu, Jing Jin and Zhu Lin

Word from Wall Street "The extraordinary returns for the US equity market over the past two years has really been driven to a meaningful amount by the seven large companies that go by the sobriquet the Magnificent Seven. Unfortunately from a portfolio management perspective, it's been Maleficent Seven. It's been the real source of pain in the market this year." David Kostin Chief US equity strategist, Goldman Sachs Click here to hear more from Kostin about the stock market and the Magnificent Seven.

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