Wall Street Seesaws as Investors Await Interest Rate Decision
Stocks closed higher on Wall Street yesterday, as investors remain optimistic about an impending interest rate cut.
The Dow Jones Industrial Average jumped 0.61% to 40,008.39, rebounding above the 40,000-point threshold for the first time since early August.
While investors eagerly await news of the Federal Reserve’s imminent interest rate decision, the S&P 500 and Nasdaq Composite Indexes also ended the day on a high note - both posting their fifth consecutive daily gains.
Stocks on the Rise
The tech-heavy Nasdaq 100 fared slightly better in the final hours of trading, ending the session up 0.09% at 19,022.68, while the S&P 500 closed at 5,455.21, buoyed by a 0.38% gain.
The rally was largely driven by stocks including Victoria’s Secret, which skyrocketed by more than 16%, and Apple, which boosted its market cap above $3 trillion for the first time.
US Economy in a Nutshell
According to data released earlier this week, inflation has continued to ease in the US, slipping to its lowest level since March 2021.
While this development is positive for consumers, experts believe it may signal an increased likelihood of an interest rate cut from the Federal Reserve. As it stands, the US Central Bank remains focused on its core objectives, which include stabilizing the economy and supporting the labor market.
James Knightley, chief international economist at ING, told Bloomberg that easing inflation means the Fed can focus more on its goal of supporting the labor market.
However, Eckhard Schulte, a fund manager at MainSky Asset Management, worries that rapidly-falling inflation rates could put excessive pressure on the Fed to orchestrate a soft landing for the economy – thereby reducing the risk of a full-blown recession.
Stocks to Watch
Alphabet, Google’s parent company, slid 2% on Wednesday, weighed down by a report that US regulators are growing increasingly wary of its dominance in the market.
Kellanova shares skyrocketed 7.8% after news emerged that food giant Mars Inc. was eyeing the Pringles potato chips maker in an $83.50-a-share deal.
Mars buying Kellanova
As it stands, the deal represents the largest acquisition of the year and looks set to create one of the biggest food conglomerates globally.
Meanwhile, tech firm Ouster tumbled 28% after warning investors of weaker-than-expected revenues.
\nDespite muted session on Wednesday, the Dow appears to have regained its footing on Thursday.
Dow Jones
While a cut in interest rates may have some short-term benefits, such as increasing stock prices and improving market sentiment, there are valid concerns about its potential impact on inflation.
With a little luck and a following wind, it seems investors might finally be on the road to recovery after a difficult period.
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