Stocks saw a rally on Thursday, recovering from earlier losses in the week as the Federal Reserve opted to suspend any potential interest rate cuts, affirming its commitment to maintaining higher rates in the near future. The S&P 500 demonstrated a robust performance, surging by 0.6%, while the Dow Jones Industrial Average and the Nasdaq Composite displayed gains of 0.3% and 0.8%, respectively.
The Federal Reserve’s decision to uphold higher interest rates follows U.S. government estimates indicating a steady 2.1% change in second-quarter Gross Domestic Product (GDP). Additionally, official figures revealed a slight increase in jobless claims from the previous week, albeit remaining below expectations. Data released by the National Association of Realtors unveiled a notable 7.1% decline in pending home sales from July to August.
Both the financial markets and the Federal Reserve have kept a watchful eye on economic indicators for any signs of inflation. Although the rapid ascent of the 10-year Treasury yield has tempered somewhat, it still hovers near 4.6%. The recent surge in oil prices reached fresh 2023 highs on Wednesday, further diminishing the likelihood of a rate cut from the Federal Reserve. However, on Thursday, oil prices began to dip, with West Texas Intermediate futures falling below $92 a barrel, and Brent crude futures slipping to approximately $95.
The most eagerly anticipated figures of the week are set to be released on Friday—the reading on PCE inflation, which stands as the Federal Reserve’s preferred gauge. While signs of inflationary pressures are evident, many speculate that the influence of the American consumer may ultimately dictate the Fed’s trajectory.
In the wake of revelations that chipmaker Micron expects wider first-quarter losses than previously forecasted, shares of the company experienced a 4% decline. Despite this setback, the stock market is displaying signs of promise and resilience following a week of considerable volatility, coupled with the Federal Reserve’s commitment to maintaining higher rates.
The remarkable rally in stocks following the steadfast stance of Federal Reserve on maintaining higher interest rates underscores the market’s capacity to swiftly adapt to evolving economic dynamics. Investors remain vigilant for the latest developments, aiming to gain insight into the potential trajectory of the market in the days ahead.
Source: Yahoo Finance
