US stocks rose today, optimism in the market continues to be supported by the prospect of interest rate cuts. Investors are now waiting for new data on the development of the United States economy. The Dow Jones index, which includes the shares of thirty leading American companies, ended today’s trading with an almost imperceptible increase to 37,306.02 points. However, the broader S&P 500 index rose 0.45 percent to 4,740.56 points and the Nasdaq Composite index, which includes many companies from the advanced technology sector, rose 0.61 percent to 14,904.81 points.
Fed and Market Expectations
According to CME’s FedWatch Tool indicator, financial markets now see an almost two-thirds chance that the US Central Bank (Fed) will cut interest rates by a quarter of a percentage point in March. The head of the Chicago branch of the Fed, Austan Goolsbee, warned today, however, that the central bank is not pre-committing to an early interest rate cut.
“The Fed would like to see financial markets react (to the expected rate cuts) more cautiously,” said CFRA Research analyst Sam Stovall. According to him, the central bank is also trying to remind that it guides its decision-making according to the incoming economic data, so there is no guarantee that the current expectations regarding the development of interest rates will be fulfilled.
On Thursday, the US Department of Commerce will publish final data on the development of gross domestic product (GDP) in the United States in the third quarter. On Friday, data on the November development of consumer spending, personal income and the price index of personal consumption expenditure will follow. This index is the Fed’s preferred measure of inflation.
Foreign exchange market
On the foreign exchange market today, the dollar weakened slightly against the euro, the US currency remains under pressure due to the prospect of the imminent start of interest rate cuts in the US. The single European currency gained roughly 0.2 percent to USD 1.0915 against the dollar around 22:00 CET.
Last week, as expected, the Fed kept the key interest rate in the range of 5.25 to 5.50 percent. However, he signaled that he could move to three interest rate cuts next year. The European Central Bank (ECB) also left its key interest rate unchanged last week. At the same time, however, she indicated that she does not intend to rush into lowering interest rates.
ČTK source
