Wall Street anticipates a higher opening as investors anticipate a rate cut.
Wall Street anticipates a higher opening as investors anticipate a rate cut. The three major indexes of Wall Street were anticipated to open higher on Wednesday, even though Treasury yields fell to multi-month lows on rising optimism that the Federal Reserve will reduce interest rates next year.
On Tuesday, Wall Street indexes closed marginally higher following remarks by hawkish Fed Governor Christopher Waller suggesting that interest rates could be reduced in the coming months should inflation persist in its downward trend.
Treasury yields plummeted in response to additional positive remarks; the yield on the benchmark 10-year note reached its lowest level over two months at 4.3090%.
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In premarket trading, megacap stocks were bolstered by the decline in yields on fixed-income investments, increasing equities’ appeal. Nvidia, Tesla, and Alphabet were between 0.6% and 1.2%.
“Markets are beginning to adjust to the notion that a soft landing is imminent and that interest rates will remain stable or decline gradually throughout 2024,” said Peter Andersen, the founder of Andersen Capital Management in Boston.
Andersen stated that the second estimate of robust GDP figures released earlier would support a robust year-end rally and contribute to the soft landing narrative in which the Federal Reserve avoids a recession.
The latest GDP data indicated that the United States economy expanded more rapidly than anticipated in the third quarter.
Traders are anticipating the “Beige Book,” an economic snapshot of the United States, scheduled to be released at 2:00 p.m. ET. Additionally, the personal consumption expenditure (PCE) index, which serves as the preferred inflation barometer of the Federal Reserve, is expected to be released on Thursday. These indicators will provide traders with additional insights into the state of the economy amid restrictive monetary conditions.
Additionally, policy remarks from an interview with Richmond Fed President Thomas Barkin at 10:00 a.m. ET would be scrutinized.
According to the CME Group’s FedWatch tool, money market participants have entirely priced in a pause in rate hikes at the upcoming December meeting, while bets on rate cuts beginning as early as March have increased to 44.5% from 34.6% the day before.
Dow e-minis increased by 115 points or 0.32%, S&P 500 e-minis increased by 21 points or 0.46%, and Nasdaq 100 e-minis increased by 94.5 points, or 0.59%, as of 8:42 a.m. ET.
General Motors, one of the individual equities, gained 8.6% before the bell as the automaker announced it would repurchase $10 billion worth of shares and increase its dividend by 33%.
Dollar Tree declined 1.3% after the retailer reduced its sales forecast for the entire year.
CrowdStrike Holdings increased 2.8% as the company predicted revenue for the fourth quarter over what the street anticipated due to robust demand for its cybersecurity offerings.
The cloud-based data management platform NetApp’s annual profit forecast increased by 10.5% due to robust demand for its cloud-based data solutions.
