Stock Markets Continue Steady Increase Anticipating Fed Rate Cut

All major stock market indices were up when the market closed on Wednesday. We anticipate them opening elevated as well for Thursday.

The Nasdaq Composite continued its lengthy upward movement on Wednesday, gaining 0.57%. it has gained almost every day for the last two weeks, marking a long-term trend that is very encouraging for investors.

 

The Dow Jones Industrial Average also climbed on Wednesday and was up by 0.14%. The S&P 500 increased too, gaining 0.42%. For the first time in 2024, both the Nasdaq and the S&P 500 gained for their 8th day in a row.

It is obvious that the momentum in the stock market is building, and tech and retail stocks are some of the best performers. The main driving factor right now for positive movement on the market is the anticipation for Federal Reserve interest rate cuts.

What Rate Cuts Mean for the Stock Market

The recent meeting minutes for the Federal Reserve indicated that there might be interest rate cuts coming in September. If so, that would be the answer to a long-awaited request. The market has been waiting for this to happen for a while now, and all through 2024, the interest rate cuts have been pushed back and delayed.

It looks like they are finally going to happen, and that is good news for a couple of reasons. It means that the lower rates will spur spending and economic growth. With lower rates, consumers are more likely to spend their money.

The rate cuts also mean that the Fed is optimistic about the US economy and especially the inflation rate. The Fed has repeatedly said this year that they are hoping to see more movement toward 2% inflation before they would approve interest rate cuts. We just saw the inflation rate drop from 3% to 2.9% in the latest inflation reading, and that seemed to be the lynchpin for the Fed to approve rate cuts.

If those cuts do happen, we expect the market to gain as a result, but the anticipation of what those cuts could do may be greater than their actual impact.

 

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
ABOUT THE AUTHOR See More
Timothy St. John
Timothy St. John
Financial Writer - European & US Desks
Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.
Related Articles
Comments
0 0 votes
Article Rating
Subscribe
Notify of
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments