Fed Hints at December Rate Cut, Propelling U.S. Stocks to Record Highs
Staff Editor US Stocks Rally as Fed Officials Hint at Potential Rate Cut
U.S. stocks rallied on Monday, with technology shares propelling the Nasdaq and S&P 500 to record highs, as Federal Reserve officials hinted at a possible interest rate cut in December. The market’s upward momentum was fueled by comments from Fed President Raphael Bostic and Governor Christopher Waller, who both expressed openness to reducing rates.
Bostic, while remaining undecided, emphasized balanced risks to employment and price stability. Waller, on the other hand, leaned towards a rate cut based on current economic data and inflation forecasts. These statements significantly influenced market sentiment, with the CME FedWatch Tool showing an increase in rate cut expectations from 65% to 77%.
The S&P 500 and Nasdaq Composite saw gains, while the Dow Jones Industrial Average experienced a slight decline. Investors are now shifting their focus to economic data and holiday shopping trends as the earnings season winds down.
Retail sales data provided a positive outlook, with Mastercard Spending Pulse reporting a 3.4% increase in Black Friday retail sales, primarily driven by online shopping. Michelle Meyer, chief economist at the Mastercard Economics Institute, noted positive consumer sentiment and budget-friendly holiday shopping trends.
As markets anticipate the Fed’s decision, upcoming economic indicators will play a crucial role. Key data releases include November auto sales, ADP employment figures, and the November jobs report. The nonfarm payroll report, expected to show 214,000 new jobs, will be particularly significant for the Fed’s policy decision.
In other market news, Intel CEO Pat Gelsinger’s resignation marked the end of a challenging tenure, while Super Micro Computer’s stock surged after dismissing accounting fraud allegations. On the political front, former President Donald Trump proposed a 100% tariff on countries abandoning the US dollar, and President Joe Biden pardoned his son Hunter Biden, who faced federal charges.
Commodities saw mixed performance, with West Texas Intermediate crude oil slightly increasing and Brent crude remaining stable. Gold prices declined, while the 10-year Treasury yield rose. In the cryptocurrency market, Bitcoin experienced a drop in value.
As the week progresses, market participants will closely monitor economic data and the Fed’s signals for further indications of potential policy shifts.
