Dow Surges to Record Highs as Fed Rate Cut Expectations Solidify Despite Mixed Economic Signals
Dow Surges to Record Highs as Fed Rate Cut Expectations Solidify Despite Mixed Economic Signals
U.S. stock markets experienced a significant rally yesterday, September 11, with the Dow Jones Industrial Average soaring over 500 points to reach new all-time highs. Traders are increasingly confident that the Federal Reserve will proceed with an interest rate cut next week, even as recent economic data presents a mixed picture.
The Dow Jones Industrial Average gained 532 points (1.2%), while the S&P 500 climbed 0.8% and the Nasdaq Composite advanced 0.7%, with all three major averages hitting new intraday records. This market optimism follows the release of August’s consumer price index (CPI) report, which showed a monthly increase of 0.4% – slightly hotter than anticipated – but remained consistent with annual expectations at 2.9%.
Adding to the complex economic landscape, the labor market showed further signs of cooling. Weekly jobless claims for the week ended September 6 unexpectedly surged by 27,000 to 263,000, reaching their highest level since October 2021. This comes on the heels of an unexpected decline in the producer price index (PPI) reported earlier in the week.
In response to these developments, Treasury yields fell, with the benchmark 10-year Treasury dropping to 4%. Market participants are now pricing in a quarter-point rate cut by the Federal Reserve at the conclusion of its September 17 meeting with near certainty, according to the CME FedWatch tool, with some odds also ticking higher for a half-point reduction.
Jay Woods, chief market strategist at Freedom Capital Markets, noted, “A quarter-point cut is a layup and the number still keeps a half-point cut on the table, especially when looking at the jobless data.”
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