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The largest outlfow from stock funds since December 2022, the market flirts with being overbought
Following another record-setting day for the stock market’s major averages, and no pre-market developments on either the earnings front or the economic data calendar, the market melt-up looks to continue. We would note, however, that as the market has put in these fresh highs, it once again flirts with being overbought as investor sentiment flashing “Extreme Greed” per the Fear & Greed Index. This helps explain the largest outflow of funds, nearly $22 billion, since late 2022 for US stocks for the week ending Wednesday, March 20.
Helping the market melt-up was the Fed’s updated economic projections that continued to show the central bank penciling in 3 rate cuts this year. However, Fed Chair Powell pointed out January and February inflation data did not bolster the Fed’s confidence we are moving closer toward its 2% target.
And if the Fed is truly being data-dependent in its thinking, it will not like what was revealed in yesterday’s US Flash March PMI report from S&P Global -“Respective rates of output price inflation accelerated sharply across both manufacturing and services, quickening to 13- and eight-month highs as companies passed through higher input costs to their customers.”
We will want confirmation in the final version of the data as well as the corresponding March report from the Institute for Supply Management, but today the market may not like what Fed Chair Michael Barr has to say should he touch on those findings.