Stock markets could rally Wednesday amid optimism for future rate cuts
Global News
Stock markets in the U.S. and worldwide are poised for a gainful Wednesday trading session as traders in the U.S. are especially optimistic with a higher potential for rate cuts.
Wall Street is pointed toward new heights before the opening bell Wednesday after new U.S. inflation data raised hopes that the Federal Reserve will cut its benchmark interest rate next month.
Futures for the S&P 500 and Nasdaq each ticked up 0.2 per cent, while futures for the Dow Jones Industrial Average rose 0.3 per cent. The S&P 500 and Nasdaq both closed at record highs on Tuesday.
TSX futures on Bay Street in Toronto are up nearly a quarter per cent ahead of the open, and just off an all-time high set earlier in August.
The rally in markets, which is partly being driven by relief over an extended truce in President Donald Trump’s trade war with China, is being powered by new optimism that borrowing costs in the U.S. will fall.
Lower rates would give a boost to investment prices and to the economy by making it cheaper for U.S. households and businesses to borrow to buy houses, cars or equipment. President Donald Trump has angrily been calling for cuts to help the economy, often insulting the Fed’s chair personally while doing so.
The Fed has hesitated, worried that Trump’s tariffs could trigger another round of elevated inflation.
The Fed will get one more report on inflation and another on the U.S. job market before its next meeting, which ends Sept. 17. The most recent jobs report was a stunner, coming in much weaker than economists expected.
Critics say the broad U.S. stock market is looking expensive after its surge from a bottom in April. That’s putting pressure on companies to deliver continued growth in profit.
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