On June 12, 2024, after the New York Stock Exchange announced the Federal Reserve interest rate, the press conference held by Federal Reserve Chairman Jerome Powell was playing on the screen, and a trader was working.
Brendan McDermid | Reuters
Stock futures were flat in overnight trading on Tuesday as Wall Street expected the Federal Reserve to deliver a long-awaited rate cut after years of aggressive rate hikes aimed at curbing inflation.
Futures and Dow Jones Industrial Average An increase of 28 points, while S&P 500 Index Futures Hovering around the flat line. Futures and Nasdaq 100 It rose slightly by about 0.1%.
Wall Street just ended a mixed trading day S&P 500 Index It rose slightly by 0.03% after the bell. Hit another record high During intraday trading. this Dow Jones Industrial Average Lost by nearly 16 points Nasdaq Index Add 0.2%.
Investors remain on high alert as the Federal Reserve is expected to cut interest rates for the first time at the end of its two-day policy meeting on Wednesday. Register for this month’s party The most important meeting in years As the Federal Reserve prepares to end the aggressive rate hike cycle that began in March 2022.
Rate cuts are generally good for corporate earnings growth and would provide welcome relief after a long period of high borrowing costs and sticky inflation. The rate-cutting cycle could also bring more gains to an already strong market and add to a record winning streak, with the S&P 500 up 18% this year. Data from Canaccord Genuity It shows that since 1974, the index has risen an average of 6.4%, 9.8% and 15.6% respectively in three months, six months and 12 months after the first downward revision.
While a rate cut appears imminent, traders are divided on how large it will be. CME Group’s Fed Watch Tools show traders are pricing in a 63% chance of a 50 basis point cut and a 37% chance of a 25 basis point cut.
Despite these market expectations, some investors remain wary of cutting interest rates too quickly. Peter Cecchini, Director of Research at Axonic Capital called a 50 basis point rate cut Given the current state of the housing market, this is “unusual” as the first step in the Fed’s rate-cutting cycle.
“I don’t think the Fed needs to take a preemptive 50 basis point cut in the current environment, and it has never done that historically,” he told CNBC.end bell” Tuesday.
