Last week, the S&P 500 posted record highs and gained 0.64%. Personal Consumption Expenditures(PCE) for August rose 2.2% from one year ago. With PCE being the Fed’s preferred inflation gauge, there is currently a 100% probability of at least a 0.25% rate cut on November 7.
I was recently asked how stocks can set record highs in the face of political uncertainty and wars. In short, the Fed has more influence over the current US economy than elections and wars on foreign soil do. The stock market increased and decreased this year with changes in the expected timing and size of Fed rate cuts. Finally, the Fed cut interest rates by 0.50% at their September meeting, and major stock indexes are flirting with recorded highs. Accommodative Fed policy on the back of strong consumer spending, a normalizing labor market, and lower inflation have contributed to the S&P 500 gaining 21.55% this year.
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Thank you for reading! You are welcome to contact me directly with questions or comments.
Regards,
David Bennett