What fuelled this week’s record-breaking stock rally
record breaking stock rally
The Federal Reserve’s long-awaited interest rate cut last week.
Last week, the S&P 500 and Dow surged to new highs after the Fed said it was cutting interest rates by half a point, signalling a change from the aggressive hiking cycle that took rates to 23-year highs record breaking stock rally.
The CNN Fear & Greed Index, which measures seven barometers of market sentiment, came in at ‘greed’.
Strong economic data this week kept the party going. Record breaking stock rallyThe S&P 500 on Thursday marked its 42nd record closing high of the year, while the Dow marked its 32nd record closing high of the year on Friday. All three major indices had a positive week. The Dow rose 0.6%, the S&P 500 added 0.6% and the Nasdaq Composite gained about 1%.
The Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation gauge.
Showed that prices paid by consumers for goods and services rose 2.2% last month on an annualised basis, down from 2.5% in July record breaking stock rally .
This figure was below the expectations of economists surveyed by FactSet.
And was one step closer towards the Fed’s 2% inflation target.
New data this week has provided further encouragement that the economy is on a strong footing.
The third estimate for second-quarter gross domestic product showed that the US economy expanded at 3% growth from a year earlier.
‘What appears to be unfolding before our eyes is a soft landing scenario that only the most optimistic can dream of.
Gregory Daco, chief economist of EY, wrote in a note on Thursday.
A soft landing is a scenario where inflation falls without the economy entering a recession.
Elsewhere, the average interest rate on a standard 30-year mortgage fell to its lowest level since September 2022 this week.
According to Freddie Mac data.
Providing relief for Americans stung by the tough housing market. Applications to refinance mortgages jumped 20% last week from the previous week.
According to Mortgage Bankers Association data. The housing market is known to be sensitive to the ebb and flow of the economy.
Investors are now looking forward to the September labour report due on Friday.
Employers added about 142,000 jobs last month, up from July’s dismal numbers.
While the unemployment rate fell to 4.2%, giving hope that the labour market is weakening but still in solid shape.
With the Fed’s current focus being on keeping the labour market healthy.
Friday’s report will likely provide clues for the Fed’s next move at its November policy meeting.
Meanwhile, technology stocks continued to rally this week on rate cut optimism and strong earnings from Micron. Nvidia shares jumped 4.6%, Tesla shares rose 9.3% and Meta Platforms shares added 1.1%.
In China, stocks climbed higher this week after the central bank introduced a policy package aimed at stimulating its struggling economy, including lowering interest rates.
Oil prices fell this week. The national average price of gas is about $3.21, according to GasBuddy.
The Financial Times reported on Thursday, citing anonymous sources.
That Saudi Arabia plans to cancel its $100 per barrel price target for oil.
Gold futures fell from a new record high reached on Thursday.
The latest in a series of records that have been set this year.
Gold has set repeated record highs this year, fuelled by central bank purchases of the precious metal and concerns about the health of the US economy.
Bitcoin surged this week. The price of the cryptocurrency was last traded at around $65,747 per coin.
