Wall St extends rally, dollar gains after inflation data
Wall Street extends rally and dollar rebounds on the last trading day of August as inflation data suggests the Federal Reserve will pause on interest rate hikes.
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Posted 8/31/2023, 9:10:00 AM
reuters.com
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US bond-market selloff continues as resilient economy prompts investors to anticipate elevated interest rates even after the Federal Reserve finishes its hikes, leading to a 16-year high in 10-year yields and increased inflation expectations.
The majority of economists polled by Reuters predict that the U.S. Federal Reserve will not raise interest rates again, and they expect the central bank to wait until at least the end of March before cutting them, as the probability of a recession within a year falls to its lowest level since September 2022.
Global stock markets and Wall Street futures are rising as traders await signals on interest rate plans from the Federal Reserve conference, with investors hoping that the Fed officials will signal an end to interest rate hikes despite concerns about inflation not being fully under control yet.
A stock market rally is likely to occur in the near future, as recent data indicates that a bounce is expected after a period of selling pressure, with several sectors and markets reaching oversold levels and trading below their normal risk ranges. Additionally, analysis suggests that sectors such as Utilities, Consumer Staples, Real Estate, Financials, and Bonds, which have been underperforming, could provide upside potential in 2024 if there is a decline in interest rates driven by the Federal Reserve.
Despite recent market gains, investors are concerned that the current rally may be the last hurrah before an economic contraction, especially after the Federal Reserve indicated that it could hike interest rates twice more this year.
Wall Street slightly increased ahead of Federal Reserve Chair Jerome Powell's upcoming speech, with futures for the Dow and S&P 500 rising 0.2%; traders hope Powell will indicate that the Fed is done raising interest rates and may cut them next year.
Wall Street's major averages rebounded with growth in communication services and technology sectors, while Treasury yields sank as a recent bond sell-off eased; traders are now waiting for Nvidia's quarterly results to gauge the AI market, and investors are hopeful for potential interest rate policy clues from the upcoming Jackson Hole Symposium.
After a strong rally, the stock market's rapid climb stalled in August, which could be seen as a relief as a choppy market with periodic downturns is more sustainable and advantageous in the long run.
The stock market rally attempt experienced a setback as the S&P 500 and Nasdaq saw a downside reversal, indicating that the correction is still ongoing, while retailers faced challenges and Treasury yields reached a 15-year high. Meanwhile, Federal Reserve Chair Jerome Powell warned of potential rate hikes due to high inflation.
Stocks rebounded after Fed Chair Jerome Powell indicated that the central bank is prepared to raise interest rates further, providing a cautious but ultimately optimistic outlook on the economy.
The dollar retreated from a 12-week high as Federal Reserve Chair Jerome Powell hinted at the possibility of further rate hikes, while the euro saw a slight increase after China reduced its stamp duty on stock trading.
Investors have been building up bets on the Federal Reserve announcing an end to its rate hikes, but the central bank's preferred inflation data and Chair Jerome Powell's comments suggest that the cycle may not be over yet.
Wall Street is focused on upcoming inflation and jobs data, looking past Fed Chair Jerome Powell's cautious message and anticipating potential interest rate hikes.
Wall Street rallied as Tesla, Nvidia, and other megacap growth stocks surged, supported by a drop in job openings and expectations of a pause in interest rate hikes by the U.S. Federal Reserve.
Stocks closed higher on Wall Street as economic reports indicated a cooling economy, potentially leading to a pause in interest rate hikes by the Federal Reserve.
Wall Street's rally in stocks is expected to pause as investors await new data on jobs and GDP to determine whether the US economy has been impacted by Federal Reserve tightening.
Wall Street is experiencing small gains and losses as investors await economic news, including an inflation indicator and more jobs data; markets rallied after consumer confidence dropped in August and job openings fell, potentially reducing inflation and deterring the Fed from raising interest rates.
Job growth in the US slowed in August, signaling the impact of high interest rates, which has given traders hope that the Federal Reserve might pause hikes; US stocks rallied on the news, with the S&P 500 on a four-day winning streak and regaining some of August's losses.
Wall Street rises ahead of new inflation and jobs data that could impact Federal Reserve's policy decisions, as futures for the Dow Jones and S&P 500 increase, while Dollar General falls 16% and software company Salesforce rallies 6% in premarket.
Wall Street ended a challenging August on a mixed note, with the Dow Jones down 0.5%, the S&P 500 losing 0.16%, and the Nasdaq gaining 0.11%, resulting in the worst monthly performance since earlier this year; however, signs of a soft landing for the US economy and lower jobless claims have sparked hopes that the Fed may ease off on interest rate hikes at its upcoming meeting.
Summary: The stock market shows signs of a rally, with major indexes surpassing the 50-day line and Treasury yields decreasing, growth stocks are leading, and software companies like Salesforce, MongoDB, and CrowdStrike reporting positive earnings; meanwhile, Amazon and Shopify announce a deeper partnership, and Tesla unveils an upgraded Model 3 while also lowering prices. Additionally, a near-perfect jobs report and tamed inflation data suggest that the Fed may not continue with rate hikes.
The Federal Reserve is expected to hold interest rates steady this month, but inflation could still lead to additional rate increases.
The US dollar is on track for its longest rally in years as the strength of the economy fuels speculation that the Federal Reserve will keep interest rates elevated, drawing money into the US as investors seek higher rates than they can get in Europe and Asia.
The dollar index has been on a sustained rally since mid-July, leading to a slight decline in gold prices due to the inverse relationship between the two, but gold has held up well despite the strength of the dollar.
Financial markets are preparing for a rebound in U.S. inflation in August, driven by higher energy prices, which could disrupt expectations of easy inflation control by the Federal Reserve.
The Wall Street Journal reports a notable shift in the stance of Federal Reserve officials regarding interest rates, with some officials now seeing risks as more balanced due to easing inflation and a less overheated labor market, which could impact the timing of future rate hikes. In other news, consumer credit growth slows in July, China and Japan reduce holdings of U.S. Treasury securities to record lows, and Russia's annual inflation rate reached 5.2% in August 2023.
The resilient growth of the US economy is fueling a rebound in the dollar and causing bearish investors to rethink their positions, although the currency's rally may face challenges from upcoming data and the Federal Reserve's meeting this month.
Stocks on Wall Street ended mixed after an inflation report showed a slight increase, but economists believe underlying inflation trends still point towards continued moderation and the Federal Reserve is expected to keep interest rates steady at its upcoming meeting, while airlines struggled due to higher fuel costs and technology stocks benefited from the possibility of no further interest rate hikes.
Wall Street stocks set for higher open as August inflation suggests the Federal Reserve won't raise interest rates, while Arm's IPO and oil prices remain in focus.
The European Central Bank has raised its main interest rate for the 10th consecutive time to tackle inflation, but indicated that further hikes may be paused for now, causing the euro to fall and European stocks to rally.
Wall Street rallied as reports suggested that the US economy is still strong, despite concerns about inflation, with the S&P 500 gaining 0.8% and the Dow Jones Industrial Average rising 1%.
European and Asian stocks rally on hopes of central banks ending rate rises and positive data indicating a potential rebound in China's economy.
Traders and investors are betting that the Federal Reserve will hold interest rates steady at its September meeting, indicating a shift in the market's interpretation of good economic news, as it suggests the Fed may be close to pausing its rate hike cycle despite inflation being above target levels and potential headwinds in the economy.
The stock market is currently stagnant and the key question is when the Federal Reserve will start cutting interest rates, as the market struggles when the Fed tightens monetary policy.
Bitcoin, ethereum, BNB, and XRP have experienced a strong price rally in 2023, but a small cryptocurrency has surpassed them, while the Federal Reserve's interest rate decisions could impact the bitcoin price.
The Federal Reserve is expected to announce a pause on interest rate hikes due to positive economic indicators and the likelihood of a "soft landing" for the economy, but future decisions will be influenced by factors such as the resumption of student loan payments and a potential government shutdown.
Bitcoin attempted a rally, reaching its highest price in three weeks, but quickly faced selling pressure, while the broader crypto market saw modest gains; attention turns to the US Federal Reserve's policy meeting for potential impact on monetary policy.
Wall Street fears that the Federal Reserve will push out the timing for rate cuts next year, sparking concerns of a hawkish pause and increasing selling pressure, despite a trend of rapid disinflation and the potential for a higher neutral interest rate.
The dollar strengthens and stocks decline as the Federal Reserve delivers a "hawkish pause" during the Fed meeting, with updates on the interest-rate decision, dot plot, and Jerome Powell press conference.
To mark Juneteenth, Wall Street will pause and there will be no trading in stocks or Treasuries, although stock futures and metal and energy futures will trade on an abbreviated schedule until early afternoon.
The Federal Reserve has paused raising interest rates and projects that the US will not experience a recession until at least 2027, citing improvement in the economy and a "very smooth landing," though there are still potential risks such as surging oil prices, an auto worker strike, and the threat of a government shutdown.
Central banks around the world may have reached the peak of interest rate hikes in their effort to control inflation, as data suggests that major economies have turned a corner on price rises and core inflation is declining in the US, UK, and EU. However, central banks remain cautious and warn that rates may need to remain high for a longer duration, and that oil price rallies could lead to another spike in inflation. Overall, economists believe that the global monetary policy tightening cycle is nearing its end, with many central banks expected to cut interest rates in the coming year.
The Federal Reserve has paused its campaign of increasing interest rates, indicating that they may stabilize in the coming months; however, this offers little relief to home buyers in a challenging housing market.
Wall Street's main indexes bounce back as U.S. Treasury yields retreat, with Ford shares rising on progress in labor talks and growth stocks rebounding.