Home / Business / Dow Stock Reaches 27,000 Due to Rate Reduction Expectations

Dow Stock Reaches 27,000 Due to Rate Reduction Expectations



US stocks advanced on Thursday after Federal Reserve Chairman Jerome Powell boosted market expectations for a short-term reduction in benchmark interest rates.

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The S & P 500 (^ GSPC) slightly up 0.01% or less than 1 point at 10:35 am ET. "data-reactid =" 16 "> The S & P 500 (^ GSPC) increased slightly by 0.01% or less by 1 point at 10: 35 am ET.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The Dow (DJI) increased by 0.37%, or 100.19 points, retreating slightly after crossing 27,000 points for the first time in its history shortly after market opening. The Nasdaq (^ IXIC) climbed 0.1% or 8.36 points. "data-reactid =" 17 "> The Dow (^ DJI) moved up 0.37%, or 100.19 points, retreating slightly after crossing 27,000 points for the first time in its existence shortly after the opening of the Nasdaq (^ IXIC) climbed 0.1% or 8.36 points.

Powell will present his semi-annual report on monetary policy to the Senate Banking Committee on Thursday in the second and final day of his congressional testimony.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In an address to the House Financial Services Committee Wednesday, The central bank leader has hinted that the Fed would be willing to lower interest rates at the end of the month to revive the US economy, amid supposed information & nbsp;"Uncertainty"& nbsp; trade tensions and the strength of the global economy. "In a statement to the House Financial Services Committee on Wednesday, the central bank executive hinted that the Fed would be willing to cut interest rates at the end of the month. help stimulate the US economy, despite the perceived "uncertainty" around trade tensions and the strength of the global economy.

"Concerns that were of concern to the market – be it trade policy and its impact on the global trading environment, [capital expenditure], concern from the Fed underestimated relative to its inflation target and the situation of the workforce – all these concerns already preoccupied the market, it seems that the Fed is also concerned about it, "Matt Forester, chief investment officer of BNY Mellon's Lockwood Consultants, told Yahoo Finance.

Market participants considered that Powell's comments were unequivocal, and adjusted expectations based on declining interest rates. The three major domestic stock indexes hit new record highs on Wednesday and short-term bond yields dropped.

Several Wall Street companies have adjusted their expectations following the Fed's July meeting following Powell's testimony. On Wednesday, Goldman Sachs economists were expecting a 25 basis point cut to 75%, 50 basis points to 15% and a policy unchanged at 10%. Morgan Stanley and UBS economists both said their basic demands prompted the Fed to cut interest rates by 50 basis points.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Futures Contracts on Federal Funds& nbsp; with a probability of 71.4% for a 25 basis point cut from Thursday morning, with a 28.7% probability of a 50 basis point relief. "data-reactid =" 23 "> Futures on Fed funds with a 71.4% probability for a 25 basis point cut from Thursday morning, as well as a probability of 28, 7% of a relief of 50 basis points.

ECONOMY

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Consumer prices rose more than expected in June, according to a statement on Thursday & nbsp;Bureau of Labor Statistics. The Consumer Price Index (CPI), which excludes food and energy price volatility and is considered a better indicator of underlying price developments , rose 2.1% in June. This increase was higher than the 2.0% increase expected by consensus analysts and observed in May. "Data-reactid =" 25 ">Consumer prices rose more than expected in June, according to a statement released Thursday by the Bureau of Labor Statistics. The Consumer Price Index (CPI), which excludes food and energy price volatility and is considered a better indicator of underlying price developments , rose 2.1% in June. This was higher than the 2.0% increase expected by consensus analysts and observed in May.

From one month to the next, the core CPI rose 0.3% in June, faster than the expected 0.2% increase. This is the largest increase in core CPI in more than a year.

WASHINGTON, DC – JULY 10: Federal Reserve Chairman Jerome Powell testifies at a House Financial Services Committee hearing on Capitol Hill on July 10, 2019 in Washington, DC. (Photo by Zach Gibson / Getty Images)

"It's a bit higher than expected, but it seems like it will take a lot more than a monthly data point to get Powell away from his casual position," said Mike Loewengart, vice president. Investment Strategy for E-Trade Financial Corporation. in an email. "The Fed has pretty much indicated that the downsides of a slowing economy and persistent trade tensions outweighed the positive points of an inflation figure in Goldilocks and the US. report on last week's solid jobs. "

Including all categories, the all-items CPI rose 0.1% stronger than expected in June, which is in line with the May reading. The overall CPI rose 1.6% over last year, which is in line with expectations.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Meanwhile, initial unemployment claims fell more than expected for the week ending July 6th, the & nbsp;Labor Department reported on Thursday. Initial jobless claims declined by 209,000 for the period, down 13,000 from the revised upward level of the previous week. Consensus economists expected the new jobless claims to match the level of the previous week, according to Bloomberg data. "Data-reactid =" 40 ">Meanwhile, initial unemployment claims fell more than expected For the week ending July 6, the Ministry of Labor reported Thursday. Initial jobless claims declined by 209,000 for the period, down 13,000 from the revised upward level of the previous week. Consensus economists were expecting new jobless claims to reach the level of the previous week, according to Bloomberg data.

The number of persistent jobless claims has however risen for the week ending June 29, to 1,723 million euros. This figure was higher than the expected 1.683 million and 1.696 million claims were revised upward the previous week.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Emily McCormick is a journalist for Yahoo Finance. Follow her on Twitter: @emily_mcck"data-reactid =" 43 ">Emily McCormick is a journalist for Yahoo Finance. Follow her on Twitter: @emily_mcck

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