Investors are flocking back to riskier assets such as bitcoin and tech stocks following the Federal Reserve’s long-awaited rate cut. The stock market hit record highs last week after the Fed announced a half-point cut in interest rates, signaling a shift from the aggressive hiking cycle that had previously been in place. CNN’s Fear & Greed Index is currently showing a “greed” reading, indicating a positive market sentiment. Strong economic data throughout the week further boosted investor confidence, with the S&P 500 and Dow marking multiple record-high closes.
The Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation gauge, showed that consumer prices rose 2.2% annually, slightly below expectations. This data brings the prices closer to the Fed’s 2% inflation target. Additionally, the third estimate for second-quarter gross domestic product revealed a 3% growth rate, indicating a solid economic performance. Economists are hopeful for a soft landing scenario, where inflation decreases without entering a recession. Mortgage rates have also dropped to their lowest levels in years, providing relief for those in the housing market.
Investors are eagerly awaiting the September labor report, which is expected to show an increase in jobs added and a slight drop in the unemployment rate. This data will offer clues about the Fed’s future policy decisions, with a focus on keeping the labor market healthy. Tech shares saw gains this week, driven by optimism from the rate cut and strong earnings reports from companies like Micron. In China, stocks surged after the central bank implemented measures to stimulate the economy, including lowering interest rates. Oil prices fell for the week, with Saudi Arabia reportedly planning to scrap its $100 per barrel price target.
Gold futures retreated from their recent record highs, driven by central bank purchases and concerns about the US economy. Bitcoin also saw a surge in price, trading at around $65,747 per coin. As the trading session comes to a close, stock levels may fluctuate slightly. Overall, the stock market is experiencing record highs and positive sentiment, fueled by the Fed’s rate cut and strong economic data. Investors are optimistic about the future, with expectations of continued growth and stability in the market.
