Good morning, traders!
The S&P 500 ($SPY) is trading above yesterday’s close. Let’s get into it…
U.S. stock futures push higher this morning, following comments from Federal Reserve officials suggesting an end to interest rate hikes and a potential rate cut. The Dow Jones Industrial Average, S&P 500, and Nasdaq 100 all showed positive movement, continuing the upward trend seen in November. This optimism was fueled by Fed Governor Christopher Waller’s remarks about the possibility of not maintaining high interest rates if inflation continues to decrease.
However, opinions among Fed officials varied. While Governor Michelle Bowman held a different view, other officials like Chicago Fed President Austan Goolsbee supported Waller’s perspective, emphasizing the risks of keeping rates high for an extended period. These dovish comments, hinting at a softer approach to monetary policy, encouraged investor Bill Ackman and others to anticipate rate cuts possibly starting as early as the first quarter of the next year.
In the bond market, these dovish statements led to a rally, with the yield on the 10-year Treasury note dropping to its lowest since September. This decrease in yield, which moves inversely to bond prices, indicates a growing confidence among investors in a more accommodative monetary policy ahead.
Economic data also pointed to a robust U.S. economy. The third-quarter GDP growth rate was revised upward, indicating a stronger economic performance than initially estimated. This growth was supported by increased consumer spending, government expenditure, and investment in both residential and nonresidential sectors. Additionally, real disposable personal income saw a slight increase, and the personal savings rate improved, suggesting a resilient economic environment amid ongoing monetary policy adjustments.
Wednesday Economic Events:
MBA Mortgage Applications 7:00am ET
GDP 8:30am ET – High Volatility Expected
Int. Trade in Goods 8:30am ET
Corporate Profits 8:30am ET
Wholesale Inventories 10:00am ET
EIA Petroleum Report 10:30am ET – High Volatility Expected
Beige Book 2:00pm ET
Fed Speaker Scheduled:
Loreta Mester 1:45pm ET
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