New York Stock Market Sees Strongest Week ⁤of the Year Ahead of FOMC Meeting

The New York stock market had its strongest week of the year ahead of the Federal Open Market Committee (FOMC) meeting, which is expected ⁣to likely result in a rate cut.

The Dow Jones Industrial Average on the New York Stock⁣ Exchange (NYSE) closed at‍ 41,393.78,‌ up 297.01 points (0.72%) ‍from the previous day. The S&P 500‍ index closed at⁣ 5,626.02, up 30.26 points (0.54%) from the previous⁣ day, and the Nasdaq Composite Index closed at 17,683.98, up 114.30 points (0.65%) from‌ the previous day.

The ‌S&P 500 and Nasdaq indexes surged 4.02% and 5.95%, respectively, after rebounding sharply from‍ last week’s plunge. ​This is their ⁣highest weekly return since early November last year.

The ⁢assessment is that expectations of a rate cut supported the rally as there were no indicators or events that could move the market. The expectation that the Federal Reserve (Fed) may make a big cut ⁤(cutting the benchmark interest rate by 0.50%p at once) at the September FOMC seems to have given the stock market momentum. When the benchmark interest rate is lowered, technology and blue-chip⁢ stocks enjoy windfall profits.

According to the Chicago ‌Mercantile Exchange (CME) FedWatch Tool, the federal funds futures market ⁢reflected a ​51% chance that the September FOMC will cut the benchmark ​interest rate by 0.50%. It ‌soared from⁤ around 15% the previous‌ morning to over 50% in one day.

Expectations are rising ⁤after current and former Fed officials hinted at the possibility of a big ⁢cut through some ⁣media outlets, and former New ⁤York Federal Reserve Bank President ⁢William Dudley also supported a 50bp cut. Former New York Federal Reserve Bank President Dudley said at the Bretton Woods⁤ Forum ​in Singapore​ the previous day that “there is a strong case to be made for a ‌0.50 percentage point cut,” adding⁤ that “if I were you, I would know what I would pursue.”