Stocks rose and the dollar declined โon Tuesday as investors โคincreased bets the Federal โReserve will begin cutting interest rates this year following weaker-than-expected โขU.S. economic data. the shift in โคexpectations reflects growing optimism that the Fed willโค prioritize supporting economic growth โover continuing too combat inflation.
The Dow Jones Industrial Average climbed 148.13 points, or โฃ0.4%, to close at 38,503.06, while the S&P 500โค gained 0.7% to 5,026.62. The Nasdaq Composite advanced 1.3% to 15,973.57. The dollar index, which measures the greenback against a basket of major currencies, fell 0.6% to 103.82. These moves signal a broader โmarketโข sentiment shift,impacting everything from โcorporate earnings to international โtrade.
The catalyst for the rally was a report showing U.S. job openings fell in January, alongside weaker-than-expected data on January durable โgoods orders. The job openings data indicatedโ a cooling labor market,fueling speculation the Fed might potentiallyโ be closer to achieving its โคgoals of price stability and full employment.
“The market is โinterpreting this data as a sign thatโ the fed will be able โฃto cut rates โsooner rather than later,” said Michaelโ Green, portfolio manager at Simplify Asset Management. “that’s a positive for risk assets like stocks.”
Treasury yieldsโ fell across the board, โwith the 10-year yield dropping to 4.17%. Lower yields make โstocks โคmore attractive relative to bonds.Investors areโข now pricing in a roughly 30% probabilityโฃ of a rate cut by the Fed’s March meeting, up from less than 20% a weekโ ago, according to the CME FedWatch tool.
energyโ stocks lagged,as oil prices fell on concerns about demand.West Texas Intermediate crude oil futuresโค settled down 1.8% at $76.49 a barrel.
Looking ahead,investors will be closely watching upcoming inflation data โคand comments from Fed officials for further clues about the timing and pace ofโ potential rate cuts. The next key data release is the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred measureโ of inflation, due later this month.
