A television station broadcasts US Federal Reserve Chair Chair Jerome Powell speaking in Jackson Hole, Wyoming, on the floor of the New York Stock Exchange (NYSE) in New York on August 23, 2024. Powell said on August 23 that the “time has come” for the US to start cutting interest rates, adding that his “confidence has grown” that the battle against inflation is on track. “The time has come for policy to adjust,” he said in a keynote speech at the Jackson Hole Economic Symposium in Wyoming, according to prepared remarks. ANGELA WEISS/AFP via Getty Images
US stock market quietly kicked off on Monday as investors get cautious about the rate changes by the Federal Reserve.
Reuters shared that the decision on interest rates by the Fed will be held on September 17 and 18 and a rate cut highly expected; the Chairman Jerome Powell has been hinting at the cut since last year which in return buoyed the market near record highs.
Federal Reserve’s Possible Interest Rate Cut
Barron’s reported that the implementation of rate cut become 59%, which was initially 30% last week. For traders, a larger cut would mean US economy is reaching its weakening point at a quick pace. Analysts believe that a clear communication from the Fed is important since the proposed rate cut could mean one-time adjustment for interest rates or future reductions.
Either way, investors are carefully assessing Fed’s signals to make sense of the trajectory of US monetary policy.
What made Fed’s signal confusing for traders is the benchmark index of Nasdaq on Friday. Reuters noted that it was its largest gain within 11 months, which showed optimism for an upcoming strong US economy rather than rate cuts.
This Monday, Nasdaq only fell by 0.2%, while S$P 500 and Dow were up 0.03% and 0.21% respectively. Notable gains saw Intel climbing up to 2% after securing $3.5 billion federal grants for production of semiconductor, while Trump Media had a 3.7% increase after a second assassination attempt on Donald Trump, and a decline in crypto stocks.