Stock Market: This Wall Street Index Encourages the FED to Reduce Rates!

On August 30, 2024, Wall Street welcomed the latest inflation news with optimism. Stock markets opened higher, boosted by the release of an inflation indicator in line with expectations, which strengthens hopes of an interest rate cut by the Fed in September.

Satisfactory results on the Wall Street stock exchange!

On the Wall Street stock exchange, the consumer price index measured by expenditures (PCE), excluding food and energy prices, posted an increase of 2.6% over a year, stable compared to the previous month. This stability, similar to that currently displayed by Bitcoin, reassured investors, who feared an unexpected rise in inflation. As a result, futures contracts on major US indices rose by 0.1% to 0.6%, indicating a start to trading in the green.

On the corporate front, several financial results were well-received. Marvell Technology, a computer chip designer, saw its shares rise 7.87% on results that beat market projections, largely driven by demand for artificial intelligence (AI). Dell also reported numbers that beat analysts’ forecasts and raised its full-year guidance, sending its shares up 2.64%.

Could the Fed consider a rate cut in September?

Expectations of a Fed rate cut in September were reinforced by the data. The central bank will hold its policy meeting on September 17-18, and equity markets are pricing in a rate cut. The CME Group’s FedWatch Barometer indicates a 69.5% probability of a 25 basis point cut and a 30.5% probability of a 50 basis point cut.

The good news on inflation has brought a breath of optimism to the Wall Street stock market. The stability of the PCE index and the positive financial results of some companies have reinforced the hopes of an interest rate cut by the Fed, which could support economic growth in the coming months. In addition to the Fed rates, Wall Street could also propel Bitcoin into a real store of value, experts say.