Wall Street Anticipates Fed's Potential Rate Cut Amid Economic Challenges
The S&P 500 and Nasdaq were expected to open at record highs, driven by optimism about a Federal Reserve interest rate cut. Despite rising core inflation and job market concerns, Wall Street hopes for a dovish move. Banking stocks rose, while uncertainties persisted due to stagflation fears.
On Wednesday, the S&P 500 and Nasdaq appeared set to open at new record highs. Market confidence is growing amid expectations that the Federal Reserve might lower interest rates next month.
In recent sessions, Wall Street witnessed a relief rally as signs emerged that import tariffs have yet to significantly impact consumer prices. The S&P 500 achieved its first record close in two weeks, despite notable core inflation and job market uncertainties. Speculation of a Federal Reserve interest rate cut in September increased, fueled by weak non-farm payrolls and a Federal Reserve leadership change.
Interest rate futures displayed a 97.3% probability of a 25 basis point cut, up from 88.8% the previous day. However, fears of stagflation, which could impact consumer spending and advertising revenue for tech companies, present potential challenges. Banking stocks, sensitive to rate changes, saw gains, while crude prices steadied as geopolitical tensions loomed. Tech and energy sectors also faced mix fortunes as earnings and international deals fluctuated.
(With inputs from agencies.)
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