Fed chair Jerome Powell said if inflation continues to decrease, there could be interest rate cuts
Stocks rallied on Wednesday after the Fed hinted at the possibility of interest rate cuts if inflation continues to decrease. As the day ended, the Dow Jones Industrial Average jumped 99 points, or 0.2%, to 40,842. The Nasdaq $NDAQ climbed 450 points or 2.6%, while the S&P 500 rose 85 points or 1.5%.
The Federal Open Market Committee (FOMC) meeting was held in the afternoon, and the central bank decided to keep the interest rate at its current levels within a range of 5.25% to 5.5%. This marks a full year since the cost of borrowing first reached a 23-year high.
As per the FOMC statement, “Recent indicators suggest that economic activity has continued to expand at a solid pace.”
“Inflation has eased over the past year but remains somewhat elevated. In recent months, there has been some further progress toward the Committee’s 2 percent inflation objective.”
After the meeting, Federal Reserve Chair Jerome Powell said during a press conference that the central bank would continue to lower interest rates if the data continued to show inflation slowing and could be prepared to take action and slash interest rates.
With that, strategist Emily Roland of John Hancock Investment Management says all eyes are on Friday’s jobs report, which will reveal what the Fed will decide about September rate cuts.
Shares of Advanced Micro Devices rose more than 4.4% due to second-quarter results surpassing consensus forecasts. Nvidia $NVDA also rose more than 12% following AMD $AMD’s report. Microsoft $MSFT’s shares dropped by more than 1% as its AI sales disappointed Wall Street.
On Wednesday, Boeing $BA is set to report before the bell, while Meta $META, Carvana, and Qualcomm $QCOM are among the names set to report after the day ends. On Thursday, crypto companies such as Coinbase and MicroStrategy will report their earnings. Berkshire Hathaway $BRK.B’s earnings will come on Friday.
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