Stock market news/ Wall Street inflation/ S&P 500 gains/ Fed interest rates/ Nasdaq composite rises/ NEW YORK/ Newslooks/ J. Mansour/ Morning Edition/ Wall Street resumed its upward momentum on Wednesday, with the S&P 500 climbing 0.6% after encouraging inflation data supported expectations of further Federal Reserve rate cuts. The Nasdaq rose 1.3%, while the Dow dipped slightly. Corporate updates drove notable stock movements, including Stitch Fix’s 25.5% jump and Macy’s 8.7% drop.
Stock Market Trends Quick Looks
- Major Index Movements: S&P 500 gained 0.6%; Nasdaq up 1.3%; Dow down 0.1%.
- Inflation Data Impact: November’s inflation rate of 2.7% matched expectations, bolstering rate-cut hopes.
- Fed Rate Cut Expectations: Traders see a 96% chance of a cut next week.
- Notable Stock Performances: Stitch Fix soared 25.5%; Macy’s fell 8.7%; Mondelez climbed 3.2%.
- Global Market Activity: European and Asian markets mostly rose, while Hong Kong’s Hang Seng dropped 0.8%.
Wall Street Bounces Back After Inflation Clears Fed Rate Path
Deep Look
Wall Street regained its footing on Wednesday as major indices rose following favorable inflation data, which bolstered expectations for another Federal Reserve interest rate cut next week. The S&P 500 climbed 0.6%, aiming to break a two-day losing streak, while the Nasdaq composite rose 1.3%. The Dow Jones Industrial Average, however, edged down by 0.1%, or 59 points.
Inflation Data Fuels Optimism
November’s inflation report showed a 2.7% annual increase in consumer prices, up slightly from October’s 2.6%. The figure aligned with economists’ predictions, reinforcing hopes for continued monetary easing. Core inflation, excluding food and energy, will be highlighted in a wholesale inflation report due Thursday.
This data encouraged traders to raise their expectations of a Federal Reserve rate cut next week, with probabilities reaching 96%, up from 89% the day prior. Such a move would mark the Fed’s third consecutive cut since September, aimed at supporting the economy amid a slowing labor market.
Ellen Zentner, Morgan Stanley Wealth Management’s chief economic strategist, noted that the inflation data signals an “all clear” for the Fed’s next step, with discussions of a potential January rate cut also gaining traction.
Corporate Highlights
Several companies drove notable movements on Wall Street:
- Stitch Fix surged 25.5% after reporting a smaller-than-expected loss and issuing upbeat forecasts for the current quarter, including stronger revenue projections.
- Mondelez International, maker of Oreo cookies, climbed 3.2% after unveiling a $9 billion stock buyback program to replace its prior $6 billion plan.
- Albertsons rose 0.5% amid its legal battle with Kroger following the collapse of their $24.6 billion merger. Albertsons plans to increase its dividend by 25% and expand its stock buyback program.
- Macy’s tumbled 8.7% after lowering its full-year profit forecasts, raising concerns about its financial health.
- Dave & Buster’s dropped 17% due to worse-than-expected quarterly losses and the resignation of CEO Chris Morris.
Bond Market Activity
Treasury yields eased following the inflation data, reflecting expectations of looser monetary policy. The 10-year Treasury yield fell to 4.21% from 4.23%, while the two-year yield, closely tied to Federal Reserve policy, declined to 4.11% from 4.14%.
Global Markets Overview
Global markets mirrored Wall Street’s optimism, with most indices in Europe and Asia closing higher. However, Hong Kong’s Hang Seng index slipped 0.8% as Chinese leaders held an annual economic policy meeting in Beijing. South Korea’s Kospi rose 1%, continuing its rebound from recent political disruptions.
Outlook
The S&P 500 has hit record highs 57 times this year, driven largely by expectations of Fed rate cuts. Analysts anticipate continued market momentum as the Fed prioritizes economic support through monetary easing. However, potential risks include inflationary pressures from extended rate cuts and challenges in the corporate sector.
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