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17 July 2024 | FXGT.com

Dow Jones Surges to Record Highs as September Rate Cut Priced In

  • Dow Jones Surges on Rate Cut Hopes: The Dow Jones Industrial Average (DJIA) soared by 1.80% on Tuesday, gaining over 700 points to set a new record-high above 40,900. This rally marks the second consecutive day of record-setting highs for the index, driven by increased market expectations of a September rate cut from the Federal Reserve. Additionally, resilient consumer spending and robust corporate earnings have further propelled the market upwards.
  • US Retail Sales Data Impact: The recent US Retail Sales data showed a flat performance in June, matching forecasts at 0.0%, while the previously reported increase in May was revised upward from 0.1% to 0.3%. This data signals a continuing slowdown in the US domestic economy, reinforcing market bets on a rate cut in September.
  • Impact of Fed Chairman Powell’s Comments: Fed Chairman Jerome Powell confirmed that the central bank might lower interest rates before inflation hits 2%, reinforcing bets for a September rate cut. This is driving the US Dollar and Treasury bond yields lower, pushing risk assets upwards.
  • September Fed Rate Cut Fully Priced In: Markets have fully priced in at least a quarter-point rate cut for September and anticipate the possibility of two additional cuts by the end of the year, with a 50% chance of a third cut. This dovish outlook supports the current bullish. While the upcoming Federal Open Market Committee (FOMC) meeting on July 31 is widely expected to hold rates steady, policymakers are anticipated to wait for additional data before confirming inflation targets.
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