UPDATE: Wall Street is experiencing a major surge as tech shares drive the S&P 500 and Nasdaq higher, bolstered by increasing bets on interest rate cuts. This rally comes just ahead of crucial inflation data set to be released later this week, making it a pivotal moment for investors.
The tech sector is leading the charge, with an impressive 1.4 percent advance. Notably, Nvidia has surged 3.0 percent to reach a more-than-one-week high, while Dell Technologies skyrocketed 5.0 percent. This rebound follows a rough start to December, where all three major indexes faced a significant dip amid rising Treasury yields and a sell-off in crypto-linked shares.
Recent economic indicators suggest a cooling economy, intensifying speculation regarding a Federal Reserve rate cut during next week’s meeting. According to the CME Group’s FedWatch Tool, traders are now estimating an 87.4 percent chance of a 25-basis-point cut, nearly double the odds from a month ago.
Peter Andersen, founder of Andersen Capital Management, commented on the Fed’s dilemma:
“Even though there are some pockets of weakness, in general the trend is strong and so I don’t think lower rates are warranted at this point.”
Investors are eagerly anticipating the release of the Personal Consumption Expenditures (PCE) Index on Friday, the Fed’s preferred inflation gauge, which could significantly influence the central bank’s policy decisions next week.
Additionally, speculation surrounds the future of Fed chair Jerome Powell, whose term ends next year. Reports indicate that White House economic adviser Kevin Hassett is a leading contender to succeed him, with an announcement expected before Christmas.
As of early trading on Tuesday, the Dow Jones Industrial Average rose 15.72 points, or 0.03 percent, to 47,304.31. The S&P 500 gained 25.23 points, or 0.37 percent, to 6,837.86, while the Nasdaq Composite climbed 197.84 points, or 0.85 percent, to 23,473.97.
In notable stock movements, Boeing jumped 6.0 percent after announcing that higher deliveries will drive positive cash flow next year. Warner Bros Discovery saw a 1.0 percent increase following reports of a second round of bids, including an offer from Netflix.
Crypto stocks are also on the rise, with Strategy and Coinbase climbing 4.2 percent and 2.4 percent respectively, as bitcoin stabilizes after its largest loss in USD since May 2021.
In a related development, Federal Reserve Vice Chair for Supervision Michelle Bowman is set to testify before the House Financial Services Committee on Tuesday, focusing on oversight of financial regulators.
On the geopolitical front, US special envoy Steve Witkoff and Jared Kushner, son-in-law of former President Donald Trump, are scheduled to meet with Russian President Vladimir Putin for discussions aimed at finding a resolution to the ongoing war in Ukraine.
As of now, declining issues slightly outnumber advancers by a 1.07-to-1 ratio on the NYSE, while the Nasdaq shows advancing issues outpacing decliners by a 1.25-to-1 ratio. The S&P 500 recorded seven new 52-week highs and two lows, while the Nasdaq saw 37 new highs and 32 new lows.
Stay tuned as these developments unfold, with significant implications for both the market and economic policy ahead.
