Financial districts are accelerating their pace.
On Wall Street, it's commonly held belief that the Fed will implement an interest rate increase next week. However, the probability of a significant increase in rates has decreased after the release of recent inflation figures. Regardless, the stock market continues to thrive, with interest-free gold reaching a new record-breaking high.
U.S. stocks saw a surge on Thursday thanks to anticipation of lower interest rates. The Dow Jones Industrial Average of blue-chip stocks closed 0.6% higher at 41,096 points. The Nasdaq climbed 1%, landing at 17,569 points, while the S&P 500 gained 0.7%, settling at 5,595 points.
U.S. producer prices saw a 0.2% increase in August. Economists had predicted a 0.1% increase, following a zero increase in July. Peter Cardillo, chief market economist at Spartan Capital Securities, stated, "Today’s figures suggest that the Fed isn't going to cut rates as aggressively as previously expected." Now, investors anticipate a 0.25% cut in the federal funds rate on September 18. A significant 0.5% cut is no longer a likely scenario. The existing rate remains within the range of 5.25% to 5.50%.
Rising oil prices due to production worries
The prospect of interest rate reductions drove up the price of metals. Gold achieved a new all-time high. The cost of an ounce of the precious metal climbed 1.9% to $2,558.06. Investors are putting their money on a positive economic impact.
Concerns surrounding prolonged production disruptions due to Hurricane Fiona led to oil price increases. The North Sea Brent crude oil futures contract appreciated 2.2% to $72.19 per barrel. U.S. West Texas Intermediate (WTI) crude oil futures rose 2.7% to $69.16 per barrel. Hurricane Fiona has temporarily halted approximately a quarter of U.S. oil production in the Gulf of Mexico.
Moderna stocks plummet
Investors also purchased technology stocks. Nvidia shares climbed 2% over two consecutive days. Reports suggest that the U.S. government plans to authorize the export of advanced chips to Saudi Arabia for Nvidia. "The market's AI fever is back in full swing," commented market strategist Jürgen Molnar of RoboMarkets.
Shares of Warner Bros. Discovery surged by over 10%. The U.S. media conglomerate renewed its content distribution agreement with telecommunications company Charter Communications ahead of schedule.
Shares of Kroger climbed 7.2% after the supermarket chain increased its revenue forecast following a strong second quarter. Conversely, Moderna shares plunged by around 12% to a four-year low after the company's sales forecast for the next year fell below analysts' predictions.
Dow shares fell around 1% following the chemical company's decision to lower its third-quarter revenue forecast. Dow cited problems at an ethylene cracker plant in Texas, as well as higher input costs and pressure on margins in Europe.
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As the likelihood of interest rate cuts increases, traders may consider investing in shares. Despite the Fed's interest rate increase expectation, the trading in shares of certain companies, such as Moderna, has seen a significant decline.
Despite the positive impact of lowered interest rates on the stock market, traders should still carefully consider the performances and future prospects of individual companies before making investments in shares.
