February 23, 2024

Investors remain optimistic interest rate cuts coming in 2024

The S&P 500 index capped off November with a robust 8.9% rise, marking its 18th strongest monthly performance since 1950. Technology stocks outpaced broader market gains, with the Nasdaq 100 index escalating by 10.8% and recording its fifth-best monthly result in a decade.

Additionally, bond markets rallied as yields took a notable dip, while metal commodities thrived in the wake of a weakening dollar.

Fueling this broad market rally was a surge in investor optimism, anticipating Federal Reserve interest rate cuts in 2024 in response to cooling inflation.

The U.S. Federal Reserve Building is seen in Washington, DC, May 3, 2023.

At the end of November, market forecasts leaned toward the Fed commencing its rate-cutting cycle in May 2024, with up to five rate reductions by the end of next year.

Fed’s preferred inflation measure slows

The personal consumption expenditure price index, known as the Fed’s preferred measure of inflation, slowed from 3.4% in September to an annual 3% rate in October, aligning with market expectations. The moderation in inflation further bolstered the prospect of multiple rate cuts in the coming year.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *