Wed. Dec 6th, 2023
    New Economic Reports Suggest Fed May Cut Interest Rates

    After hitting a high point, the rally on Wall Street came to a halt as stocks experienced a slight decline. The S&P 500 slipped 0.2%, the Dow Jones dropped 0.2%, and the Nasdaq composite dipped 0.6%. Meanwhile, the Australian sharemarket is anticipated to start the day on a flat note. Retailers reported their earnings for the latest quarter and provided forecasts for the upcoming holiday shopping season, resulting in mixed reactions. Lowe’s saw a 3.1% decrease despite posting better profit than expected but falling short on revenue. Similarly, Best Buy beat profit expectations but missed on revenue and adjusted its forecast for the full year. In contrast, Dick’s Sporting Goods experienced a 2.2% increase in profit and revenue for the third quarter, surpassing analysts’ expectations. As the earnings reporting season for the summer comes to a close, companies in the S&P 500 are on track to deliver their first year-over-year growth in earnings per share. However, the focus of the stock market has shifted to interest rates. Rising hopes of a rate cut by the Federal Reserve, due to a perceived cooling of inflation, have driven the recent market surge. Economic reports indicating a slowdown in inflation and economic activity have led traders to anticipate an interest rate cut by the Fed in the near future. Treasury yields have dropped as a result. While the lower interest rates stimulate the economy, there is a concern that they could also lead to increased inflation. The Federal Reserve officials, including those who usually advocate for high rates, have recently softened their stance, suggesting a decreased likelihood of a rate hike in December. Economists now expect the Fed to begin cutting rates in June 2024, and some predict a mild recession in the early months of that year. The rest of Wall Street remains divided on the possibility of a recession.