Markets Brace for Fed Move: U.S. stock index futures displayed a muted start on Monday as the market geared up for a pivotal week, featuring the Federal Reserve’s interest rate meeting and the release of inflation data. These events are poised to assess investor optimism regarding a soft landing for the economy.
The recent positive sentiment surrounding stabilizing interest rates and robust quarterly earnings propelled equities towards the end of the year. The S&P 500 approached its highest intra-day level of the year, reaching 4,607.07 points. Focus now turns to the Consumer Price Index (CPI) data expected on Tuesday, with forecasts anticipating unchanged headline inflation for November.
Additionally, the Federal Reserve’s interest rate decision is scheduled for Wednesday, where markets have priced in a rate-hike pause, but expectations for rate cuts in the coming year have been rising. The European Central Bank and the Bank of England are also set to deliver their interest rate decisions later in the week.
Pre-market movements indicated a slight dip in Nasdaq futures, particularly for megacap stocks such as Alphabet, Tesla, and Amazon.com. Macy’s experienced a significant boost, surging 19.1% in premarket trading, following a $5.8 billion offer from an investor group to take the department store chain private.
Peers Kohl’s and Nordstrom also saw gains, rising about 4.5% and 6.4%, respectively. Meanwhile, Cigna soared 12.4% after ending negotiations for the acquisition of rival Humana and announcing plans to repurchase $10 billion worth of shares.
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Our Reader’s Queries
Will Fed lower interest rates 2024?
In December, the FOMC gave the green light to a plan that would see interest rates slashed three times in 2024. Each cut is expected to be 0.25%, with additional reductions in 2025 and 2026 to bring the federal funds rate down even further.
Are bonds expected to go up in 2024?
Vanguard predicts a significant improvement in the outlook for government bonds as the U.S. economy stabilizes and interest rates decrease. The index fund leader anticipates a nominal annualized return of 4.8% – 5.8% for U.S. bonds over the next decade, according to its 2024 outlook.
What stocks benefit from lower interest rates?
If the Fed decides to cut interest rates, there are a few stocks that could be worth investing in. Chewy, for example, is likely to see increased spending capacities, which could lead to a boost in profits. Bank of America could also be a good option, as it may benefit from increased volume. Carnival is another stock to consider, as it could enhance its bang-for-the-buck proposition. These are just a few of the stocks to keep an eye on if the Fed goes through with interest rate cuts.
What will happen if Fed raises interest rates?
A Fed rate hike can have a significant impact on your finances. According to Ken Tumin, LendingTree’s senior banking industry analyst, you can expect to pay higher interest charges on your credit card, auto loans, and mortgages. This means that your overall expenses will increase, and you may need to adjust your budget accordingly. It’s important to stay informed about these changes and plan ahead to minimize the impact on your financial well-being.