Wall Street experiences its top week of the year due to dreamlike interest rate scenarios.
Investor excitement surges following a "Wall Street Journal" report. Could the US central bank shock everyone with a substantial interest rate reduction next week? Many investors are placing bets on it, heavily stocking their portfolios. However, shareholders of Boeing and Adobe seem troubled.
Friday saw a rise in stock prices driven by interest rate cuts speculation on US exchanges. The possibility of the US central bank potentially announcing a large interest rate cut next week sparked significant interest. Previously, this was seen as unlikely. A "Wall Street Journal" piece fueled this, suggesting that US central bankers are contemplating a more aggressive monetary easing due to their belief in controlled inflation and growing concerns over employment.
The likelihood of a 0.5 percent cut over a 0.25 percent cut skyrocketed to 49 percent on the interest rate futures market. As a result, bond yields decreased, boosting the gold price which reached an all-time high.
The Dow Jones Index climbed by 0.7 percent to 41,394 points, nearly hitting its August-end record high by approximately 200 points. The S&P 500 and the Nasdaq Composite went up by 0.5 and 0.7 percent respectively. The Dow Jones saw a 2.6 percent increase during the week, while the S&P 500 experienced a 4 percent rise, and the Nasdaq a near 6 percent surge - representing their best weeks of the year.
Oil prices hold recovery gains
New data offered support to the interest rate hypothesis. Surprise decrease in monthly import prices and improvement in the consumer sentiment index from the University of Michigan contributed to the positive mood, also seeing a slight fall in inflation expectations from the previous month.
The US dollar decreased along with falling US market interest rates. The dollar index shed 0.3 percent. Both developments were beneficial for the gold price, which gained an additional 0.9 percent or $23 to reach $2,582 - hitting a new all-time high of $2,586 during the day.
Oil prices maintained their recovery gains of the previous day, fueled by Hurricane Francine-induced production outages in the Gulf of Mexico and along the US coast.
Boeing strike could be costly
In individual stock market performances, Boeing dropped by 3.7 percent. Employees of the largest union at the aircraft manufacturer have voted for a strike, potentially leading to production halts, including on the popular 737 model. Rating agencies see Boeing's creditworthiness as under threat, warning of a possible downgrade to "junk" status.
Adobe reported improved profits and revenue in its third quarter but was dissatisfied with its outlook. Its stock price dipped by 8.5 percent.
Oracle gained 0.4 percent. The software company presented an optimistic long-term growth perspective at an analyst day, thanks to robust cloud area demand, and increased its revenue expectations for the next fiscal year.
Ford plans to restart its Chennai plant for vehicle exports, requiring necessary adjustments to the facility. The stock price rose by 0.7 percent.
Uber shares went up by 6.4 percent after entering into an expanded partnership with Waymo, an autonomous driving company owned by Alphabet (+1.7 percent).
RH (Restoration Hardware) surged nearly 25% after reporting strong quarterly results. Singular Genomics Systems received a buyout offer from Deerfield Management, causing shares to soar by almost 120%.
The investor excitement surrounding a potential interest rate cut from The Fed continues, with the likelihood of a 0.5% cut increasing significantly on the interest rate futures market. However, despite the positive sentiment towards other stocks, Boeing and Adobe seem to be struggling, with Boeing experiencing a drop in stock prices due to potential strike-related production halts and Adobe being dissatisfied with its outlook despite reporting improved profits and revenue.
