Day: September 18, 2024

(Bloomberg) — Stocks drifted near all-time highs ahead of the Federal Reserve decision, with traders split on the size of an interest-rate cut.

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The S&P 500 closed little changed after briefly crossing the threshold of a record amid an increase in US retail sales. Economically sensitive industries once again outperformed tech. Treasury yields edged up, with shorter maturities leading the move. The market-implied odds the Fed announces a 50-basis-point reduction on Wednesday were around 55%.

For several market observers, perhaps the most-important aspect of what happens may be the investor reaction. Could a 25 basis-point reduction leave traders worried the Fed is behind the curve? Could a 50 basis-point move spook markets that the Fed must know the economy is in dire shape? Or will investors be reassured that, whatever the Fed does, Chair Jerome Powell is on top of the situation?

“It’s rare under the Powell Fed for markets to be this ‘up in the air’ on what exactly the Fed will do with just one day to go before the decision,” according to Bespoke Investment Group strategists. “Although maybe the Fed is happy with the market being 100% sure that we’ll at least get a cut.”

A survey conducted by 22V Research showed investors who expect a 25 basis-point reduction are split on whether that cut would deliver a “risk-on” or “risk-off” reaction. Meantime, those betting on 50 basis points think a smaller Fed move would be “risk-off.”

The S&P 500 closed near 5,635. The Nasdaq 100 and Dow Jones Industrial Average were little changed. The Russell 2000 of small firms added 0.7%. Treasury 10-year yields rose two basis points to 3.64%. The dollar gained.

While the market has typically done well on Fed Days when rates have been cut, performance in the week after the first rate cut of a new easing cycle has been pretty weak, according to Bespoke.

The S&P 500 has averaged a drop of 0.56% from the close on the day before the first rate cut through one week later, while eight of 10 sectors have averaged declines as well. Financials and health care have seen the most weakness in the week after the first rate cut, while tech and communication services have bucked the trend and averaged gains.

The Fed will either cut 50 basis points or opt for a 25 basis-point reduction, but signal that they will be more aggressive going forward, according to Matt Maley at Miller Tabak.

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Still, he says, that does not guarantee that the stock market and/or bond market will rally in a meaningful way. Maley says the Fed will likely try to convey that a more dovish stance is not seen as something that means they’re suddenly worried about an imminent recession.

“Therefore, given that the stock market is approaching overbought territory, we could still get a ‘sell the news’ reaction to the Fed this week,” he added.

“If the Fed doesn’t initiate its easing cycle with 50 basis points, surely a 25 basis-point move will be enveloped by a dovish tone,” according to Quincy Krosby at LPL Financial. Ryan Detrick at Carson Group said “a larger cut out of the gate makes a lot of sense” given that now the big concern is the potential for a quickly slowing labor market.

Steve Sosnick at Interactive Brokers still believes the Fed should lean to 25 basis points, but notes that years of trading experience have taught him to respect the message of the market.

“And that message has been saying 50,” he said.

Sosnick noted there will likely be widespread disappointment if the Fed opts for 25 basis points. He says equity markets always crave more liquidity, and at the same time, bond markets have all but priced in an aggressive rate cutting path for future meetings. So the smaller cut would bias against both.

Kristina Hooper at Invesco expects the Fed to cut by 25 basis points as a bigger reduction would raise alarm bells about the state of the US economy.

“Recall that the Fed started a brief easing cycle with a 50 basis point cut in March 2020 with the global pandemic upon us; it would be very hard to argue that the situation is so dire now,” she noted.

What Powell says in his press conference about the state of the US economy could help build confidence for those worried about a recession in the near term, Hooper added.

“In addition, it will be valuable to hear Powell’s thoughts on the expected path of rate cuts — in particular, what conditions could trigger a change of course, either a moderation or acceleration in easing,” she noted. “These are just things you can’t glean from the dot plot, so the press conference is ‘must see TV’ in my view.”

Corporate Highlights:

• Microsoft Corp. raised its quarterly dividend 10% and unveiled a new $60 billion stock-buyback program, matching the size of a repurchase plan three years ago.

• Intel Corp. made a raft of announcements, spurring optimism that the chipmaker’s turnaround plan is starting to bear fruit.

• Salesforce Inc. is unveiling a pivot in its artificial intelligence strategy this week at its annual Dreamforce conference, now saying that its AI tools can handle tasks without human supervision and changing the way it charges for software.

• Newmont Corp., the world’s biggest gold miner, said it’s on track to raise $2 billion — if not more — from selling smaller mines and development projects.

• JPMorgan Chase & Co. is in discussions with Apple Inc. about taking over a credit card portfolio that rival Goldman Sachs Group Inc. has been trying to ditch.

• Snap Inc. Chief Executive Officer Evan Spiegel unveiled a new version of the company’s Spectacles smart glasses, revitalizing an effort to build an advanced augmented reality product that may one day replace or rival the smartphone.

• Ozempic, the blockbuster diabetes shot made by Novo Nordisk A/S, is “very likely” to be one of the next drugs targeted for a price cut in bargaining with the US government’s Medicare program, a company executive said.

Key events this week:

• Eurozone CPI, Wednesday

• Fed rate decision, Wednesday

• UK rate decision, Thursday

• US US Conf. Board leading index, initial jobless claims, US existing home sales, Thursday

• FedEx earnings, Thursday

• Japan rate decision, Friday

• Eurozone consumer confidence, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 was little changed as of 4 p.m. New York time

• The Nasdaq 100 was little changed

• The Dow Jones Industrial Average was little changed

• The MSCI World Index was little changed

• S&P 500 Equal Weighted Index rose 0.2%

• Bloomberg Magnificent 7 Total Return Index rose 0.4%

• The Russell 2000 Index rose 0.7%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.1% to $1.1117

• The British pound fell 0.4% to $1.3163

• The Japanese yen fell 1.1% to 142.22 per dollar

Cryptocurrencies

• Bitcoin rose 4% to $59,953.71

• Ether rose 3.4% to $2,352.4

Bonds

• The yield on 10-year Treasuries advanced two basis points to 3.64%

• Germany’s 10-year yield advanced two basis points to 2.14%

• Britain’s 10-year yield advanced one basis point to 3.77%

Commodities

• West Texas Intermediate crude rose 1.8% to $71.34 a barrel

• Spot gold fell 0.5% to $2,568.94 an ounce

This story was produced with the assistance of Bloomberg Automation.

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• The elite group worth more than $100 billion includes Elon Musk, Jeff Bezos, and Bill Gates.

• The 16 members have grown about $414 billion richer this year and are jointly worth $2.4 trillion.

• Walmart heirs Jim and Rob Walton joined the club this month and their sister could soon follow.

Elon Musk, Jeff Bezos, and Mark Zuckerberg are among the handful of people on the planet with a net worth above $100 billion.

Members of this elite group have amassed 12-digit fortunes by owning huge amounts of stock in some of the world’s most valuable companies. Most are founders and either current or former CEOs, and some, such as Warren Buffett, would be much richer if they didn’t give billions to charity.

There may be only 16 centibillionaires, but their combined wealth is around $2.4 trillion, according to the Bloomberg Billionaires Index. They’re worth more than Amazon or Google-parent Alphabet, which command market values of around $2 trillion each.

All but one of them have grown richer this year, adding a net $414 billion to their collective fortunes. Procter & Gamble ($409 billion), Costco ($406 billion), and Johnson & Johnson ($398 billion) are all worth less than that.

Walmart heirs Jim and Rob Walton joined the exclusive group this month thanks to their net worths surging by over $29 billion this year. Their sister, Alice, could soon follow given her net worth stands at $99.5 billion.

Here’s the list of individuals worth at least $100 billion, showing Bloomberg’s estimate of their net worth at the time of publication, how much it’s changed this calendar year, and the source of their wealth.

All figures are correct as of September 16, 2024.

1. Elon Musk

Net worth: $251 billion

YTD change in wealth: +$21.7 billion

Source of wealth: Tesla and SpaceX stock

Elon Musk is the CEO of the electric-vehicle maker Tesla and the spacecraft manufacturer SpaceX. He’s also the owner of X, the social network formerly known as Twitter.

His other businesses include The Boring Company, Neuralink, and xAI.

2. Jeff Bezos

Net worth: $209 billion

YTD change in wealth: +$32.1 billion

Source of wealth: Amazon stock

Jeff Bezos is the founder, executive chairman, and former CEO of Amazon, the e-commerce and cloud-computing giant.

He also founded the space company Blue Origin and owns The Washington Post.

3. Mark Zuckerberg

Net worth: $186 billion

YTD change in wealth: +$58.3 billion

Source of wealth: Meta stock

Mark Zuckerberg is the cofounder, chairman, and CEO of Meta Platforms, the social-media titan behind Facebook, Instagram, WhatsApp, and Threads.

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Meta’s Reality Labs division makes virtual-reality and augmented-reality headsets and experiences.

4. Bernard Arnault

Net worth: $180 billion

YTD change in wealth: -$27.8 billion

Source of wealth: LVMH stock

Bernard Arnault is the founder, chairman, and CEO of LVMH Moët Hennessy Louis Vuitton. His conglomerate owns a bevy of luxury brands, including Dior, Fendi, Dom Pérignon, Sephora, and Tiffany & Co.

5. Larry Ellison

Net worth: $174 billion

YTD change in wealth: +$50.8 billion

Source of wealth: Oracle and Tesla stock

Larry Ellison is the cofounder, chief technology officer, and former CEO of Oracle, an enterprise software company specializing in cloud computing and database platforms.

He invested in Tesla prior to joining the automaker’s board in 2018 and made more than 10 times his money on paper by the time his term as a director ended in August 2022.

6. Bill Gates

Net worth: $161 billion

YTD change in wealth: +$20.1 billion

Source of wealth: Microsoft stock

Bill Gates is the cofounder and former CEO of Microsoft, which makes the Office application suite, the cloud-computing platform Microsoft Azure, and Xbox consoles.

He’s renowned for his philanthropic work at the helm of the Bill & Melinda Gates Foundation, one of the world’s largest charitable entities.

7. Steve Ballmer

Net worth: $149 billion

YTD change in wealth: +$18.3 billion

Source of wealth: Microsoft stock

Steve Ballmer served as Microsoft’s CEO between 2000 and 2014. He joined the company in 1980 as Bill Gates’ assistant, initially negotiating a profit share which he later swapped for an equity stake when it became excessively large.

Ballmer retired as CEO in 2014 with a 4% stake — a position now worth more than $120 billion. He promptly bought the Los Angeles Clippers for $2 billion and remains the basketball team’s owner.

8. Larry Page

Net worth: $143 billion

YTD change in wealth: +$16.2 billion

Source of wealth: Alphabet stock

Larry Page cofounded Google with his Stanford University classmate Sergey Brin in a friend’s garage in 1998 and served as CEO until 2001.

He took the reins again between 2011 and 2015 after Google was restructured as a subsidiary of Alphabet alongside other businesses such as YouTube and Waymo.

9. Warren Buffett

Net worth: $141 billion

YTD change in wealth: +$21.4 billion

Source of wealth: Berkshire Hathaway stock

Warren Buffett acquired Berkshire Hathaway when it was a failing textile mill in 1965 and has since grown it into one of the world’s largest companies. His nearly 15% stake is worth around $145 billion.

The famed investor’s conglomerate owns scores of businesses, including GEICO, See’s Candies, and BNSF Railway, and holds multibillion-dollar stakes in public companies such as Apple and Coca-Cola.

Buffett has gifted around half of his Berkshire shares to the Gates Foundation and four family foundations since 2006. All else being equal, if he’d retained all his stock he would be the world’s wealthiest person with a net worth over $300 billion.

10. Sergey Brin

Net worth: $134 billion

YTD change in wealth: +$14.4 billion

Source of wealth: Alphabet stock

Sergey Brin cofounded Google with Page in 1998 and served as the search-and-advertising titan’s first president.

He and Page stepped down from their respective roles as Alphabet’s president and CEO in 2019.

11. Mukesh Ambani

Net worth: $112 billion

YTD change in wealth: +$15.3 billion

Source of wealth: Reliance Industries stock

Mukesh Ambani is the chairman and managing director of Reliance Industries and Asia’s richest person.

His father, Dhirubhai Ambani, founded Reliance and trusted Mukesh to grow the conglomerate’s petrochemicals business and expand into new areas such as telecommunications.

Mukesh threw a star-studded, multi-event wedding ceremony for his son Anant Ambani this summer.

12. Amancio Ortega

Net worth: $111 billion

YTD change in wealth: +$23.6 billion

Source of wealth: Inditex stock

Amancio Ortega is the founder and former chairman of Inditex, a fashion retail group home to brands such as Zara, Bershka, and Massimo Dutti.

The billionaire philanthropist and real-estate investor stopped running Inditex in 2011. His daughter Marta Ortega Pérez was appointed chair at the end of 2021.

13. Michael Dell

Net worth: $108 billion

YTD change in wealth: +$29.5 billion

Source of wealth: Dell stock

Michael Dell is the founder, chairman, and CEO of the eponymous computer maker. Dell stock has ballooned from below $40 in March last year to upwards of $110, valuing the company at over $80 billion, as investors wager it will be a key beneficiary from the AI boom.

Dell owns about 46% of his company, and pocketed well over $10 billion from the sale of Dell-backed VMware to Broadcom last year.

14. Jensen Huang

Net worth: $104 billion

YTD change in wealth: +$60.4 billion

Source of wealth: Nvidia stock

Jensen Huang cofounded Nvidia in 1993, but the microchip maker has become a market darling within the past two years as its semiconductors have proven pivotal to developing artificial intelligence.

Nvidia’s stock price has skyrocketed from under $15 at the end of 2022 to $130, valuing the business at about $2.9 trillion and making Huang one of the richest people in the world.

15. Jim Walton

Net worth: $102 billion

YTD change in wealth: +$29.9 billion

Source of wealth: Walmart stock

Jim Walton is the youngest son of Walmart founder Sam Walton, who gave each of his four children a 20% stake in the budding retail business over 70 years ago. Jim and his two surviving siblings, Rob and Alice, each still own over 11% of the company.

Jim’s net worth crossed $100 billion this month thanks to the retailer’s stock soaring 53% this year.

16. Rob Walton

Net worth: $101 billion

YTD change in wealth: +$29.3 billion

Source of wealth: Walmart stock

Rob Walton, Sam Walton’s eldest, sat on Walmart’s board for more than 40 years before retiring this June.

His net worth passed $100 billion for the first time last week, making him the second Walton to join the club after his younger brother, Jim. Their sister, Alice, is poised to follow them given her $99.5 billion net worth.

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