Federal Reserve Needs to Be 'More Aggressive' With Rate Cuts Amid Weakening Jobs Market, Wall Street Analyst Says

By Jace Dela Cruz

Apr 01, 2024 12:19 AM EDT

The Federal Reserve needs to be more aggressive with rate cuts this year because of the weakening jobs market, according to Canaccord Genuity Wealth Management's chief market strategist. 

Traders work the floor during morning trading at the New York Stock exchange (NYSE) ahead of the US Federal Reserve's decision on lending rates, in New York on January 31, 2024. (
(Photo : ANGELA WEISS/AFP via Getty Images)

Fed Needs to be 'More Agressive'

During an appearance on CNBC's "Fast Money on Thursday," Tony Dwyer emphasized the urgency for the Fed to take decisive action.

He stressed the severity of the situation based on recent economic data. Dwyer believes that easing inflation and the deteriorating jobs market will eventually push the Fed to act.

"I'm not saying that they have to go back to zero, but they have to be more aggressive... One of the most aggressive topics that I talk to clients about is how bad the incoming data is," Dwyer told CNBC.

While acknowledging the challenges in accurately interpreting jobs report data, Dwyer claimed that falling employment survey participation rates distort this Bureau of Labor Statistics data. He anticipated significant revisions, and "most of them have been negative now" to the upcoming monthly jobs reading scheduled on Friday.

Dwyer clarified that his stance was not based on conspiracy theories but rather on the limitations of data collection methods, which could skew the accuracy of economic indicators. He underscored the necessity for proactive measures, such as rate cuts, to address the prevailing economic challenges.

READ NEXT: Donald Trump Accuses Fed Chair Jerome Powell of Making Politically Motivated Decisions to Help Democrats 

Federal Reserve Officials Still Intend to Cut Rates Three Times This Year

According to CNBC, during the March Federal Reserve policy meeting on interest rates, officials still intend to cut rates three times this year, assuming economic growth continues. They would be the first cuts since March 2020.

Tony Dwyer thinks the rate reduction will boost financials, industrials, consumer discretionary, and healthcare stocks. The groups have been positive this year.

"Our call is to buy into the broadening theme on weakness rather than simply adding to the mega-cap weighted indices. The top 10 stocks still represent 33.7% of the total SPX [S&P 500] market capitalization," Dwyer wrote in a recent note to clients. "History shows that is historically high and doesn't last forever."

Looking ahead, Dwyer projected a potential shift in investment dynamics. He anticipated a more equitable distribution of market performance by the end of the year and into 2025.

This projection underlines the potential impact of the Federal Reserve's actions on the market, making it a crucial issue for investors to consider. 

READ MORE: Federal Reserve Poised to Cut Interest Rates 6 Times in 2024 as US Economy Slows Down: ING

© 2024 VCPOST, All rights reserved. Do not reproduce without permission.

Join the Conversation

Real Time Analytics