The Fed’s Latest Caution on Inflation Helps Lift US Stocks
On Wednesday, the stock market saw a resurgence following cautious comments from Federal Reserve officials. They pointed to falling inflation levels and warned about the potential risks of too-restrictive interest rates.
The US stock market experienced an upward move on Wednesday, resuming its rally from November as investors analyzed the latest comments from Fed officials and new economic data. Major indexes rose early in the day as bond yields eased, particularly the 10-year US Treasury which slipped six basis-points to about 4.276%.
Investors are digesting the latest signals from Fed officials, who indicated that interest rate hikes might be over and cuts could be coming soon. Fed Governor Christopher Waller said on Tuesday that central bankers have no reason to maintain high interest rates if inflation continues to fall. Furthermore, the market could be at risk by keeping interest rates restrictive for too long, according to Chicago Fed President Austan Goolsbee.
As a result, investors are now pricing in a 46% chance that the Fed will reduce interest rates by March of next year, a substantial increase from the 14% chance that was forecast in late October, as reported by the CME FedWatch tool. In positive news, the Consumer Confidence Index edged higher to 102 in November, up from the revised reading of 99 in October. Additionally, the Commerce Department stated that the GDP saw a small upwards revision, with the economy growing at an estimated 5.2% pace last quarter, up from the originally estimated 4.9%.
Shortly after the 9:30 a.m. ET open on Wednesday, US indexes stood at:
– S&P 500: 4,582.76, up 0.61%
– Dow Jones Industrial Average: 35,483.00, up 0.17% (+61.78 points)
– Nasdaq Composite: 14,409.43, up 0.89%
In commodities, bonds, and crypto, the following changes were noted:
– West Texas Intermediate crude oil rose 1.14% to $77.28 per barrel, while Brent crude, oil’s international benchmark, inched higher to $82.28 with a 0.99% increase.
– Gold slipped 0.09% to $2,039.76 per ounce.
– The yield on the 10-year Treasury slid six basis-points to about 4.276%.
– Bitcoin climbed 1.76% to $38,049.
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