Markets on High Alert: NYSE Plays it Cool as Fed Rate Cut Looms, Nasdaq Takes a Hit
Stock Market Update: Excluding Tech Stocks, Major Indices Rise on Rate Cut Expectations
Stocks excluding tech stocks rise on expectations of rate cut, with concerns about an economic downturn due to interest rate cuts.
Traders at the New York Stock Exchange (NYSE) in the United States. New York (USA)/Reuters Yonhap News
The New York Stock Exchange saw a mixed performance on the 16th (local time), as investors await the U.S. Federal Reserve’s (Fed) decision on interest rates.
The Dow Jones Industrial Average closed at 41,622.08, up 228.30 points (0.55%) from the previous trading day, hitting a record high. The S&P 500 index also finished trading at 5,633.09, up 7.07 points (0.13%). However, the Nasdaq index, which is centered on technology stocks, closed at 17,592.13, down 91.85 points (0.52%).
Investors are taking a wait-and-see approach while waiting for the results of the Federal Open Market Committee (FOMC) regular meeting on the 18th. The possibility of a ‘big cut’ in which the Fed raises the base interest rate by 0.5 percentage points (p) is increasing at this FOMC. According to the Chicago Mercantile Exchange (CME) Group FedWatch Tool, interest rate futures market participants see a 65.0% chance that the Fed will cut interest rates by 0.5%, and a 35.0% chance of a 0.25% cut.
The market is paying attention to whether the Fed’s 0.5% rate cut will be able to allay the ”R fear” (recession concerns). “We will see some form of rate cut this week,” said Kelly Cox, a strategist at Ritholtz Wealth Management. ”Whether it is 0.25% or 0.5%, a single rate cut will have a minimal impact on the economy. What is most important is the path and intensity of rate cuts over the next year or more.”
The Dow Jones Industrial Average hit a record high on the day, and major sectors rose, but semiconductors fell. Nvidia fell 1.95%, Broadcom fell 2.19%, and AMD fell 0.15%. “It’s not a complete reshuffle of market dominance, but other areas outside of tech are starting to pick up, and that’s related to lower interest rates,” said Christopher Barto, senior analyst at Fort Pitt Capital.