US Stocks Climb as fed Rate Cut Expectations Firm
NEW YORK – November 30, 2023 - US stock indices continued their ascent Friday, fueled by growing anticipation of potential interest rate cuts by the Federal Reserve as economic data suggests cooling inflation. The market’s positive trajectory comes ahead of next week’s Fed meeting, where a 25-basis point rate reduction is increasingly expected.
The core personal consumption expenditures price index, the Fed’s preferred inflation gauge, rose 0.2% in September, matching expectations for a third consecutive 0.2% increase. While the annual reading remains below 3%, indicating stable but persistent inflationary pressures, the data has bolstered expectations for monetary easing. Analysts at BMO, including Ian Lingen, believe the data “supports a new rate cut of 25 basis points next week, but does not indicate any urgency for the Fed to accelerate the pace of cuts in 2026.” However, not all observers agree, with rick Reeder, chief investment officer for global fixed income at BlackRock, anticipating potential opposition and disagreements during the upcoming meeting.
Beyond macroeconomic factors,positive sentiment in the technology sector contributed to the market’s gains. Shares of Moore Threads Technology, a Chinese artificial intelligence chip company, surged 425% on its Shanghai debut following strong sales reported by Nvidia partner Hon Hai Precision Industry. Conversely, Netflix shares experienced a dip after announcing a partnership with Warner Bros. Discovery in a deal valued at $72 billion.
Despite the broader market optimism,institutional interest in Bitcoin remains subdued. blackrock’s iShares Bitcoin Trust (IBIT) has recorded its longest streak of weekly outflows since its January 2024 launch, with investors pulling over $2.7 billion during the five weeks through November 28,and an additional $113 million on Thursday. This outflow contributed to a deepening decline in Bitcoin’s price, falling below $90,000 on Friday.
According to Bloomberg Markets Live Macro Strategist Edward Harrison, the decline in cryptocurrency prices, alongside other factors, is “holding back a potential year-end rally.” West Texas Intermediate crude prices stabilized near $60 per barrel,while gold prices reversed earlier gains.
