Stock Market Today: Gains Amid Cooling Inflation and Fed's Interest Rates Cut
Stock Market27/09/2024
Mr. Smith
On Friday, stock markets climbed as investors reacted positively to an inflation report that could significantly influence the Federal Reserve's next decision on interest rate cuts. The S&P 500 (^GSPC) rose by 0.1%, marking its third consecutive record-high close for the week, while the Dow Jones Industrial Average (^DJI) and the Nasdaq Composite (^IXIC) both saw gains of approximately 0.2%.
Fed's Preferred Inflation Metric Shows Continued Cooling
The August report of the Personal Consumption Expenditures (PCE) index, which is the inflation gauge most closely monitored by the Federal Reserve, indicated a further decrease in price pressures. The core PCE index rose by just 0.1% month over month, falling below Wall Street expectations. This has led to growing speculation that the Fed could be preparing for another significant interest rate cut in the coming months.
More than half of traders, approximately 52%, are now expecting a 50 basis point cut in interest rates at the Fed's next meeting, which would mark the continuation of a more accommodative monetary policy stance aimed at achieving a "soft landing" for the economy.
Stock Markets Respond Favorably
The S&P 500 and Nasdaq Composite have both been on a winning streak, with investors growing more confident about the strength of the U.S. economy. A recent GDP report combined with cooling inflation has solidified expectations that the Federal Reserve will be able to manage the transition to lower rates without triggering a recession.
This optimism has sparked a rally across various sectors, particularly in technology stocks. Shares of Alibaba (BABA, 9988.HK), JD.com (JD, 9618.HK), and Meituan (3690.HK, MPNGY) all surged amid a buying spree in Chinese markets, which have been buoyed by new stimulus measures from the Chinese government.
Chinese Markets Boost Global Sentiment
Chinese stock markets have experienced their largest weekly gain since 2008, fueled by hopes of increased demand for luxury goods and a series of economic stimulus packages from the Chinese government. These developments have benefited global markets, with Chinese demand driving a surge in luxury stocks worldwide.
Meanwhile, in the U.S., individual stock movements included a decline in Costco's (COST) stock, which slipped in morning trading after the company's revenue failed to meet Wall Street expectations. However, shares of Intel (INTC) rose by 1.8% after reports emerged that the chipmaker is in talks with the U.S. government to finalize $8.5 billion in CHIPS Act funding.
Looking ahead, market participants will continue to focus on inflation data and potential moves by the Federal Reserve. As investors prepare for the possibility of further interest rate cuts, optimism remains high for continued gains in both U.S. and global markets.
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