Major US indices were on a downtrend today, following a negative performance the previous day.
Traders reacted to an unexpected expansion in US manufacturing for the first time since September 2022, suggesting a stronger economy.
Consequently, traders are adjusting their expectations regarding interest rate cuts from the Federal Reserve this year.
Sustained job growth indications from the upcoming US non-farm payroll data could support the view that rates could stay high for longer as speculation that the Fed may delay its first rate cut has grown. Moreover, several Federal Reserve officials are slated to speak, and could affect the market.
Sector-wise, the real estate market could come under additional pressure as it remains adversely affected by uncertainties surrounding interest rates and monetary policy projections, given its sensitivity to such rates.
The healthcare sector also lagged, particularly as health insurer stocks declined on Tuesday. This followed the Centers for Medicare & Medicaid Services’ finalisation of the 2025 rate announcement for Medicare Advantage and prescription drug coverage, with government payments to these plans expected to increase by 3.7% year-over-year, which disappointed the industry.
The technology sector could also weigh on the market’s performance if traders move to secure their gains.
