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Monday, March 4, 2024

Wall Street Continues Surge Amid Growing Expectations of Rate Cuts

Wall Street’s primary indices commenced the last week of the year on a positive note, with growing expectations of early rate cuts by the Federal Reserve boosting investor sentiment after the Christmas holidays.

Dovish Fed Outlook and Record Highs

The anticipation of a dovish policy shift by the Fed in the coming year, driven by signs of moderating inflation, propelled the S&P 500 index close to its record high from January 2022. A potential close above this level would affirm the index’s bullish trend since hitting a bottom in October 2022.

Eighth Consecutive Weekly Gains: Wall Street

US stocks closed higher on Friday following the release of the Commerce Department’s Personal Consumption Expenditures (PCE) report, indicating a gradual decline in inflation toward the Fed’s target of an average annual 2 per cent. The three major indexes marked their eighth consecutive weekly gains, representing the S&P 500’s longest winning streak since late 2017.

Rate-Cut Expectations and Trader Sentiment: Wall Street

Traders are betting on a rate cut of at least 25 basis points by the central bank in March 2024, with the probability increasing to 83 per cent from 21 per cent in November, according to the CME Group’s FedWatch tool.

Sector Gains and Market Outlook

Most S&P 500 sector indexes showed gains, with the exception of healthcare. Intel rose by 4.0 per cent after Israel’s government approved a $3.2 billion grant for a new $25 billion chip plant in the country. The Philadelphia semiconductor index reached a record high, while the small-cap Russell 2000 index touched its highest level in 20 months.

Year-End Trading Landscape

Trading volumes are expected to remain low this week, with many market participants away for year-end holidays. The only significant economic data anticipated is the jobless claims report, and no Fed officials are scheduled to speak.

Individual Stock Movements: Wall Street

Manchester United shares climbed 2.2 per cent after billionaire Jim Ratcliffe finalized a long-awaited deal to acquire a 25 per cent stake in the football club at $33 per share. In other market movements, Gracell Biotechnologies surged 59.8 per cent following AstraZeneca’s announcement that it would acquire the China-based firm for up to $1.2 billion.

Market Dynamics and Conclusion

Advancing issues outnumbered decliners on both the NYSE and Nasdaq, reflecting the overall positive sentiment in the market. Wall Street’s performance suggests a robust outlook as the year comes to a close, driven by a combination of dovish Fed expectations, record highs, and sector-specific development.

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