In a winning streak that shows no signs of cooling down, stocks surged for the seventh consecutive session on Tuesday. This surge was propelled by renewed investor confidence in the Federal Reserve’s intention to conclude its tightening campaign this year. The tech-heavy Nasdaq Composite (^IXIC) led the charge with a 0.9% increase, extending its own winning streak. The S&P 500 (^GSPC) also saw gains, edging up by nearly 0.3%, while the Dow Jones Industrial Average (^DJI) increased by almost 0.2%, or close to 60 points.
Recent indicators of a weaker U.S. economy led the market to speculate that the Fed might ease off on its rate hikes. However, central bankers have emphasized that they remain open to the possibility of further increases, even if a pause is considered. Despite the prevailing optimism in the market, cautious voices, including Minneapolis Fed President Neel Kashkari, echoed concerns about the need for continued efforts to rein in inflation. This sentiment was shared by other Fed members, and Chairman Jerome Powell is scheduled to address the matter later in the week.
“There was quite a bit of euphoria at the end of last week on the belief that the Fed is done, the jobs market is slowing, that the US economy is going to experience a soft landing,” remarked Michael Hewson, Chief Market Analyst at CMC Markets UK to Reuters. “People have started to become a bit more clear-eyed. There is the risk that the Fed could rise again.”
The potential for the Fed to raise interest rates had a notable impact on oil prices, causing them to dip below $80 a barrel for the first time in over two months, despite the potential for supply cuts from Saudi Arabia and Russia. Weaker export and import data from China also contributed to the decline in oil prices. On a more positive note, the International Monetary Fund revised its GDP growth forecasts for the United States for this year and the next.
Corporate news for the week featured WeWork’s bankruptcy filing on Monday, following struggles with costly leases. The once highly valued U.S. startup has seen its shares plummet by approximately 98% this year. Earnings season remained in full swing, with both Uber and Rivian reporting on Tuesday, and Disney slated to unveil its results on Wednesday.
At the close of trading, stocks extended their winning streak into the seventh consecutive session, driven by confidence in the Federal Reserve’s intention to conclude its rate-tightening policies this year.
Source: Yahoo Finance
