US Stock Market Sees Positive Close as Interest Rate Cut Hopes Rise

The New York Dow Jones Stock Exchange index closed on a positive note on Friday, September 13, as investors grew more hopeful that the Federal Reserve (Fed) would cut interest rates by 0.50% next week. Small stocks that are sensitive to interest rates rose sharply.

The Dow Jones Industrial Average closed at 41,393.78 points, an increase of 297.01 points or +0.72%, the S&P 500 index closed at 5,626.02 points, an increase of 30.26 points or +0.54%, and the Nasdaq index closed at 17,68, an increase of 114.30 points or +0.65%.

Weekly Gains and Market Performance

All three major stock indexes closed near two-week highs and posted strong gains this week, with the S&P 500 up 4.02% and the Nasdaq 5.95%, posting their biggest weekly percentage gains since early November last year. Meanwhile, the Dow Jones Index increased by 2.60%.

Interest Rate Cut Expectations

CME’s FedWatch tool indicates that expectations for a 0.50% rate cut increased to 49% on Friday from 28% on Thursday. Meanwhile, the possibility of a 0.25% interest rate cut is 51%.

Bill Dudley, former president of the New York Fed, said on Thursday that there is a strong chance that the Fed will cut interest rates by 0.50%.

Market Reaction and Analysis

Jim Baird, chief investment officer at Plante Moran Financial Advisors in South Field, Michigan, said, “There are rumors starting again that the Fed will discuss cutting interest rates by 0.50%.”

Smaller companies are more sensitive to changes in interest rates. This is because they rely heavily on loans and unstable interest loans.

“If investors think the Fed has to accelerate to cut interest rates because the economic situation is deteriorating. “You don’t see risky assets like small caps rally like this,” Baird said: “Today, we saw riskier stocks rally strongly.”

Consumer Confidence and Individual Stock Moves

The University of Michigan released a survey on Friday showing that US consumer confidence improved in September This is because inflation has fallen. Still, Americans remain cautious ahead of November’s presidential election.

The survey results show that the US Consumer Confidence Index rose to 69.0 in September, the highest level since May. and above analysts’ expectations of 68.3 from 67.9 in August.

In terms of individual stock moves, Uber shares rose 6.4% after the ride-hailing platform company announced that it will launch its ride-hailing service in Austin, Texas, and Atlanta, Georgia, in partnership with Waymo, a subsidiary of Alphabet.

By Rattana Phongtawich