After the US inflation and producer price figures for August were released, which were in line with expectations, the former president of the New York Federal Reserve Bill Dudley once again put the scenario of a 50 basis point cut by the US central bank on the table.
The probability of a decline of this size jumped from 28% on Thursday to 47% today, according to the CME FedWatch tool, cited by Reuters.
This scenario encouraged investors, with the S&P 500 index and the technological Nasdaq Composite recording their fifth consecutive session of gains and the best week of the year, with a rise of 4.02% and 5.95%, respectively.
The S&P 500 gained 0.54% to 5,626.02 points, about 1% from all-time highs. The Nasdaq Composite advanced 0.65% to 17,683.98 points. The Dow Jones Industrial Average added 0.72% to 41,939.78 points.
A rate cut of 25 basis points was considered virtually certain, “but then a series of articles were published in the Wall Street Journal and the Financial Times suggesting that a 50-point cut is still on the table, which led markets to reassess their expectations”, says a note from Deutsche Bank, seen by Negócios.
“Markets want the Federal Open Market Committee (FOMC) to quickly cut interest rates and continue to combat the risk of a recession. The meeting is a risk event and will remain so regardless of whether it eases by 25 or 50 basis points next week,” Bob Savage, head of markets strategy at BNY Mellon, told Reuters.
Among the main market movements, Boeing lost 3.69%, after workers at a factory on the East Coast of the United States went on strike, after rejecting a proposal from the company.
Still on the negative side, Adobe fell the most in the S&P500, falling 8.47% after revising its profit outlook for the fourth quarter downwards, while Moderna fell 2.01%, still penalized by sales forecasts for 2025 that were well below market expectations and a delay in the break-even point by two years, which led at least three investment houses to reduce the pharmaceutical company’s target price.
On the other side, Oracle rose 0.4% after raising its revenue outlook for fiscal 2026.
Investors now turn their attention to the Federal Reserve’s two-day meeting next Tuesday and Wednesday as they continue to look for clues about how big a rate cut is seen as all but certain.
Source: www.jornaldenegocios.pt
