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Monday, December 6, 2021

Rate Cut Looms, Wall Street Rallies


FLASH: The technology sector was the biggest boost to the S&P with a 3.3% advance, led by gains in Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT)

Wall Street’s 3 major indexes rallied Tuesday to clock their biggest one-day gains in five months after Fed Chairman Powell left the door open for a possible rate cut.

Chairman Powell said the Fed would act “as appropriate” to address trade war risks a day after St. Louis Fed chief James Bullard said a rate cut may be warranted soon. He said the Fed was “closely monitoring the implications” of a trade dispute that has disrupted global markets.

The last time the benchmark S&P index showed a bigger daily percentage gain was on 4 January 2019, when Chairmen Powell turned more Dovish after a late 2018 sell-off, with a promise that the Fed would be patient and flexible in its interest rate path.

Investors have been betting the Fed would cut rates at least once by the end of Y 2019, according to CME Group’s Fedwatch, and Tuesday’s comments helped to back The Street’s bets.

Given the fact there’s more than a 95% probability of a rate cut priced into fixed income it is good to hear the Fed say it will wait for the economy to tell it what to do. If the economy slows due to tariffs, the Fed would consider cutting rates.

Tuesday, the major US stock market indexes finished at: DJIA +512.40 at 25332.18, NAS Comp +194.10 at 7527.09, S&P 500 +58.82 at 2803.27

Volume: Trade on the NYSE came in at 889-M/shares exchanged

  • NAS Comp +13.4% YTD
  • S&P 500 +11.8% YTD
  • Russell 2000 +11.9% YTD
  • DJIA +8.6% YTD

HeffX-LTN’s overall technical outlook for the major US stock market indexes is Neutral to Bullish in here.

Stay tuned…

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