US equities surged on Friday, with the S&P 500 and Nasdaq 100 aiming to extend their winning streak to five days. Investors are keenly awaiting the Federal Reserve’s decision on interest rates next week, which is anticipated to mark the first rate cut since 2019.
The Fed’s upcoming announcement is generating significant market anticipation, with expectations for a potential rate reduction ranging from 25 to 50 basis points. According to the CME FedWatch Tool, there is an almost even split in expectations between a 25-basis point and a 50-basis point cut.
Following recent benign inflation data and initial jobless claims, the focus has shifted to the Fed’s forthcoming policy decision. With inflation trending toward the Fed’s 2% target and a slight increase in the unemployment rate, some investors are advocating for a more substantial 50-basis point cut. However, Bank of America strategists view this as less likely, predicting instead a 25-basis point reduction at the initial announcement.
Bank of America economist Aditya Bhave commented, “While there are risks of larger cuts in subsequent meetings, we anticipate the Fed will initiate with a 25 basis point cut next week.” He also noted that the Fed is likely to stress data dependence, potentially adjusting the pace of future cuts based on economic developments.
The expected rate cut will be the Fed’s first reduction since 2019.
As of Friday morning, US index performances were as follows:
S&P 500: 5,606.96, up 0.22%
Dow Jones Industrial Average: 41,264.30, up 0.41% (+167.53 points)
Nasdaq Composite: 17,584.40, up 0.08%
Other notable developments include:
Boeing workers went on strike, halting manufacturing operations and causing the company’s stock to fall by 3%.
Americans have reached a historic cumulative net worth of $163.8 trillion.
JPMorgan and Bank of America are implementing new measures to address junior banker burnout.
In commodities, bonds, and cryptocurrencies:
West Texas Intermediate crude oil rose by 1.17% to $69.78 per barrel.
Brent crude, the global benchmark, increased by 1.06% to $72.73 per barrel.
Gold gained 0.95% to $2,605.00 per ounce.
The 10-year Treasury yield decreased by 2 basis points to 3.651%.
Bitcoin fell by 0.56% to $57,812.
