Growth on Wall Street. Does the Fed intend to limit the scale and pace of interest rate cuts?

Luc Williams

The Dow Jones Industrial was up 0.40 percent at the close. and amounted to 38,424.27 points. The S&P 500 gained 0.96% at the end of the day. and amounted to 5,000.62 points. The Nasdaq Composite rose 1.30%. and closed the session at 15,859.15 points. The Russell 2000 small-cap index rose 2.42 percent to 2,011.75 points. The VIX volatility index fell by 9.34%, to 14.37 points.

“Stronger data weakens hopes for an interest rate cut”

In the USA, there was a decline in the MBA mortgage application index – the seasonally adjusted index fell by 2.3%. in the week ended February 9 – reported the Mortgage Banks Association (MBA). Previously, the index increased by 3.7%.

Investors are analyzing the US inflation reading. CPI in the US increased by 3.1% in January. on a y/y basis, and m/m increased by 0.3%. Expected +2.9%. y/y and +0.2 percent mdm. Core inflation increased by 0.4%. mdm and 3.9 percent rdr. Expected +0.3%. mdm and +3.7 percent rdr.

“We are not just looking at the inflation rate and are now focusing on the level of disinflation in goods and services, but it appears that the decline in inflation is progressing slower than expected. The Fed will feel vindicated in the messages it has used regarding rate cuts because there is now no doubt that they will be more staggered. We’re not at the point where we’re worried about inflation picking up again, but we’re not out of the woods yet either, said Neil Birrell, chief investment officer at Premier Miton Investors.

“The stronger data dampens hopes that the Federal Reserve will cut interest rates in the near future. We will probably have to wait until the second half of the year for the Fed to start cutting rates. The issue is not so much whether the bank will cut rates this year, as that is almost certain at this point, but how many rate cuts there will be,” said Daniela Hathorn, senior market analyst at CapitalCom.

Currently, federal funds rate futures indicate that there will be interest rate cuts this year. in the US by 90 bps, which is a revision from 160 bps. expected at the beginning of the year. Markets estimate the probability of an interest rate cut. by 25 bp. at 32 percent

Although inflation may be slightly higher, it still remains on the path back to the target

Chicago Fed President Austan Goolsbee assessed that although inflation may be slightly higher than recently for several months, it still remains on the path to returning to the target. He added that conditioning rate cuts on inflation reaching the target would be quite a restrictive approach.

Airbnb fell more than 1.5%, although the company beat expectations for its revenue in the last quarter. Nvidia’s shares gained 2.5%, and the company’s capitalization was just below the level of Alphabet, one of the members of the “Magnificent Seven” group.

Lyft gained 35%. after the passenger transportation platform beat quarterly profit estimates and said it would generate positive free cash flow for the first time in 2024. Robinhood Markets gained 13%. The company unexpectedly posted a profit for the fourth quarter, driven by higher interest income from customers repaying loans and a rebound in sales.

Intuitive Machines fell more than 3%. after the company’s planned launch of its robotic lunar lander was postponed for at least a day, less than two hours before launch on Wednesday. Cryptocurrency-related stocks such as Coinbase, Marathon Digital and Riot rose several percent each. after the price of bitcoin rose to its highest level in over two years.

Citigroup rose over 2%. after Piper Sandler raised its rating on the lender’s stock to “overweight” from “neutral.” On the oil market, WTI futures for March are priced at USD 76.63 per barrel, down 1.59%, and April Brent futures are down 1.49%. up to USD 81.54/b.


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