Bets by traders were largely tilted toward a 25-basis point rate hike in May, with odds of a pause at 39.1%, according to CME Group's Fedwatch tool.
"We could see inflation bottom out a little bit higher than anticipated, which may mean that the Fed continues their rate hiking a lot longer and further than many currently expect," said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest. U.S. stocks have weathered turbulence in the global banking sector to notch gains in the first quarter, with the S&P 500The tech-heavy Nasdaq recorded its strongest first-quarter jump of 17% since mid-2020.
"We've seen the tech sector rally so hard and so far above everything else that we do expect some profit taking during the month of April," Nolte said. A survey from S&P Global on Monday showed manufacturing activity stayed in contractionary territory in March.The quarterly earnings season is also around the corner, with companies expected to start reporting results in the next few weeks.
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