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Stock Market News: Dow Rises 700 Points
The S&P 500 heads for best day since 2023. The Nasdaq is also gaining after better-than-expected jobless claims data.
Last Updated:
Aug. 8, 2024 at 2:17 PM EDT
2 hours ago
The Market’s Rate-Cut Obsession Is Over. Now the Economy Is Its Main Focus.
The market’s obsession with interest-rate cuts has finally been replaced by worries about the economy. Want proof?
Stocks are rallying broadly after a lower-than-expected weekly update on initial jobless claims. The rally comes despite a shift in expectations for September rate cuts.
Following today’s update on jobless claims, odds of a 50 basis point interest-rate cut in September were down to 57.5% from nearly 70% on Wednesday, according to the CME FedWatch Tool. The odds of a single 25 basis point cut were up to 42.5% from 31%.
There was a time when dialed-back expectations for rate cuts would have sent stocks tumbling. But after stocks fell sharply late last week and on Monday due to rising worries that the Federal Reserve could wind up behind the curve on interest-rate cuts, traders are now reacting positively to any reassuring updates on the economy. We’ll see if that changes after next week’s consumer price index.
A "too hot" reading could conjure fears of "stagflation" where the economy struggles while inflation remains hot. A "too cold" reading could spark more fears about an economic slowdown signaled by falling prices.