The stock market is gearing up for its rate cut era
CNN
Wall Street is undergoing a palpable vibe shift.
Wall Street is undergoing a palpable vibe shift. Strong corporate earnings have helped stocks notch repeated record highs in 2024, despite stubborn inflation forcing investors to dial down their expectations for how many times the Fed will cut rates this year. But a slew of cooling inflation data in recent weeks has led Wall Street to bet that the Federal Reserve will finally cut interest rates in September — and that there are now more options for gains beyond just the Big Tech stocks that have dominated the market this year. Data released Friday morning showed the Personal Consumption Expenditures price index, the Fed’s preferred inflation gauge, slowed to 2.5% for the 12 months ended in June — another sign for hopeful investors that inflation is continuing to ease from its four-decade high. The Dow jumped 620 points, or 1.6%, on Friday. The S&P 500 gained 1% and the Nasdaq Composite added 0.7%. Economic data has also remained remarkably resilient even as rates stay at a 23-year high. That, coupled with the slowdown in inflation, has raised hopes that the central bank could tame prices without triggering a recession, a feat it has achieved just once since the 1990s, according to some economists. Data Thursday showed the economy expanded at a robust 2.8% annualized rate during the second quarter, blowing past economists’ expectations.
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