U.S. government debt headed into the final trading day of July on pace for its longest monthly string of rallies in three years, helped by easing concerns about supply and the widely anticipated start… Adam Turnquist, chief technical strategist for LPL Financial, says historical market performance since 1950 suggests there’s no good reason for investors to “sell in May and go away” this year. “We have long been of the belief that it is the economy that is most important, and not lower interest rates for the sake of propping up stock prices,” Zaccarelli says. The FOMC has maintained its target fed funds interest rate range at between 5.25% and 5.5% since July 2023, its highest target range since 2001.
Top Stocks of the Day
The Federal Reserve seems poised to cut interest rates soon, and fear of a recession is one driver why the central bank would want to slash borrowing costs. For over a year, economists and investors have been fearful that elevated interest rates and tight monetary policies could tip the U.S. economy into a recession. U.S. consumers seem healthy for now, but the Fed is reaching a critical point in its battle against inflation. The S&P 500 has resumed its march higher as strong first quarter earnings numbers have helped ease investor fears about inflation and a potentially delayed Federal Reserve pivot to interest rate cuts. Credit card companies could lower their APRs in response to cuts from the Fed, said LendingTree credit analyst Matt Schulz. The average interest rate on a new credit card now at 24.84%, the highest since LendingTree started tracking rates in 2019.
How the job market has responded to higher interest rates
Summer election-year stock market strength has historically continued through August before markets tend to cool in September and October leading up to Election Day. “Markets are convinced that U.S. large cap companies will see many years (not just one) of improving earnings. Earnings for 2024 only have to come through slightly better than last year, and nothing occurs on the macro side (economic growth, geopolitics) to derail further earnings growth in 2025 and 2026,” Colas says. Investors frequently overreact to discouraging news, and to me it feels like The Trade Desk’s stock — which has dipped in recent days — is suffering collateral damage from the YouTube numbers.
Is US consumer spending increasing or decreasing?
In the second quarter, consumer spending increased a solid 2.3% annualized, above the 1.5% pace of early this year but below the more-than-3% clip in the second half of 2023. The monthly number, which represents the percentage of people who are unemployed and looking for work, ticked up from 4% in May. The last employment report showed an increase of 206,000 workers in June, but cmt salary in india in the same report, the Bureau of Labor Statistics revised the April and May job gains down by 111,000. All three months fell well below the 10-year median job growth of 243,000. Bond yields have already trended lower in anticipation of lower inflation and an imminent interest-rate cut. Investors are eagerly awaiting quarterly earnings reports from big tech names this week.
Investors are hoping the market can continue its bullish momentum in June as the S&P 500 enters a three-month stretch that has historically been one of the best periods of the year for stocks. Jeff Cox is a finance editor with CNBC.com where he covers all aspects of the markets and monitors coverage of the financial markets and Wall Street. His stories are routinely among the most-read items on the site each day as he interviews some of the smartest and most well-respected analysts and advisors in the financial world.
- But some economists and policy experts believe the Fed has already waited too long to cut rates, citing weakening job numbers and cooling inflation.
- The Fed’s last hike was in July 2023, when the benchmark rate was brought to its current level.
- That’s up from a tepid gain of 1.4% early this year and a 2.5% increase for all of 2023.
- The Daily Money newsletter equips you with the knowledge to spend and save smart.
- It’s not just about who’s up or down, but understanding why they’re moving that truly matters.
Credit card debt is near a record high, and delinquencies are historically elevated. Joanne Hsu, director of the surveys of consumers at the University of Michigan, wrote in the July report that sentiment “remains guarded as high prices continue to drag down attitudes, particularly for those with lower incomes.” Hiring by private U.S. companies rose less than forecasted in July, a sign that the labor market is starting to slow in the face of higher interest rates.
Still, the rate remains well below the 10-year monthly median rate of 4.2%. The job market had been on a similar roll in 2020 before the pandemic put millions out of work. At best, analysts say, we can hope for the Fed to drop hints of a rate cut to come, maybe in September. Lindsey Bell, Chief Strategist at 248 Ventures, discusses market volatility, stocks vs. bonds, and earnings season. Second-quarter earnings season is underway with some big banks having already delivered earnings results during the opening week of July and kick-starting the earnings period for the financial sector.
Despite the recent sell-off, many big tech names still have rich valuations. Bond yields were little changed early Wednesday as traders awaited a monetary policy update from the Federal Reserve. Elizabeth Burton, Goldman Sachs Asset Management client investment strategist, https://www.1investing.in/ joins ‘Money Movers’ to discuss what the Federal Reserve’s path looks like from here, thinking beyond the small cap trade… Hours ahead of the FOMC’s announcement on Wednesday, stocks rose and technology rallied after multiple days of mixed market results.
If the Fed confirms those expectations on Wednesday, bond yields could reverse slightly. Ultimately, though, they could move even lower, especially if the Fed signals more than one rate cut might be coming, analysts said. High interest rates increase borrowing costs for consumers and corporations, weighing on economic growth and profitability.
Now, with inflation continuing to cool, economists are making predictions about when the central bank will begin cutting. The development, combined with a recently cooling job market, should bolster the case for the Federal Reserve to cut interest rates in the next couple of months − a move that likely would juice the economy and U.S. stocks. Even if the Fed hints that a rate cut is coming soon, as many economists predict, don’t expect a noticeable decline in credit card interest rates, analysts said.
