The S&P has its best day since April. The Fed and monetary policy are already late
On a day when it was known that October inflation in the US was lower than expected, indices in New York traded optimistically with gains of over 1.4%. It is expected that the Fed will not raise interest rates again.
Wall Street’s major indexes closed higher on Tuesday, a day when optimism flooded New York’s main squares.
The gains were driven by October US inflation numbers – which were lower than expected and raised expectations that the Fed will have already ended its monetary policy tightening cycle and could begin cutting interest rates in mid-2019.2024.
The Dow Jones Industrial Average advanced 1.43% to 34,827.70 points points, while the Standard & Poor’s 500 index rose 1.91% to 4,495.70 points, recording the best day since April and trading above the 4,500 point threshold for the first time in two months. The Nasdaq technology index jumped 2.37% to 14,094.38 points. points and gained 9.8% in November, on track for its best month since January.
The CPI fell more than expected to 3.2% year-on-year, which compared with expectations for an increase of 3.3% and was the first slowdown in four months. This value compares to an increase of 3.7% in September.
Core inflation, which excludes more volatile food and energy prices, was slightly below economists’ expectations, slowing from 4.1% to 4% year-on-year. However, it grew by 0.2% in terms of monthly variation.
Market estimates are now 100% that the Fed will keep interest rates unchanged in December, compared to 86% before inflation was known, according to data from CME FedWatch, which was consulted by Reuters.
“There is optimism that inflation is calming to a level where the Fed can take its foot off the accelerator,” Keith Buchanan, portfolio manager at Globalt Investments, told CNBC.
However, analysts are unanimous about the Fed’s rhetoric, which should continue to favor caution and data reliance, because “inflation is still too high and the labor market is too tight for the Fed to declare victory and announce the end of rates.” “The rate hike cycle,” UBS analyst Brian Rose wrote in a note seen by Bloomberg. Rose believes that the rhetoric of US central bankers should change only within three months.
Also contributing to the gains was the decline in interest rates on North American 10-year debt, the benchmark, to a level below 4.5%, after reaching 5% in recent weeks.
Among the notable moves, Snap shares jumped 7.38%, after Amazon announced that it would allow Snapchat users in the United States to purchase products listed on the “e-commerce” platform directly through the social media network.
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