In the upcoming weeks, as investors navigate one of the most volatile times of the year for equity markets, a blazing rally in U.S. stocks will have to contend with a slog of economic data, looming political uncertainty, and a corporate earnings test.
This week, the Federal Reserve announced a significant 50 basis point rate cut, initiating the first cycle of monetary easing in the United States since 2020. As a result, the benchmark S&P 500 opened a new tab and reached its first closing of all-time high in two months.
The Nasdaq composite dropped 0.36 per cent, The tech heavy index, with tech giants like Nvidia and Apple pushing the index to achieve a new record level.
After Jerome Powell, Chairman of the Federal Reserve, delivered a much anticipated gift of a hefty 50 basis points cut in the interest rate on Thursday, the overall reaction of Wall Street was a subdued one.
The Nasdaq Composite opened near the closing level of the previous trading day, which was 18,013.98 points. The index rang the opening bell at 17,999.35 and went on to touch the day low of 17,835.64 points on the US bourse.
The index of the tech giants like Apple, Google’s parent Alphabet, and iPhone manufacturer Apple shuttered the last trading session the week on 17,948.32 points, concluding with 65.66 points, in negative territory.
The S&P 500
The S&P 500 lost 0.2 per cent from its record levels during yesterday’s trading session. The standards and poors 500 stock index closed with marginal gains the session after Federal Reserve chair Jerome Powell announced the expected gift of the, interest rate cut.
Yesterday’s trading session, the S&P 500 opened at 5,709.64 points, which was very close to the closing level of the previous trading day. The index slipped to a day low of 5,674.49 points in the opening hour of the trading session.
The S&P 500 rang the closing bell at 5,702.55 points in the last trading session of the week.
In contrast, the Dow Jones Industrial Average reached an all-time high by 38 points, amounting to 0.1 per cent.
The rate-cut reaction
By making the cut, the Fed ended a cycle during which it maintained a two-decade high for the main interest rate in an attempt to curb excessive inflation by slowing the US economy.
According to Chair Jerome Powell, the Fed can concentrate more on maintaining a strong labour market and preventing a recession now that inflation has dropped from its peak two summers ago.
Because hiring has started to slow down as a result of rising interest rates, the Fed is still under pressure. According to some detractors, the economy may have suffered because the central bank delayed cutting rates for too long.
