Tuesday’s closing price increase for US stocks put an eighth weekly victory within reach as investors continued to be bullish about the possibility of interest rate cuts despite cautions that such expectations are exaggerated.
For the fifth consecutive record close, the Dow Jones Industrial Average (^DJI) increased by about 0.7%, or more than 250 points. While the benchmark S&P 500 (^GSPC) increased by roughly 0.6%, the tech-heavy Nasdaq Composite (^IXIC) also saw a slight increase of approximately 0.7%.
The significant gains occur as Federal Reserve representatives attempt to dampen speculation about a rate cut as early as March. They stated that it is “premature” to assume the central bank has finished raising interest rates and hinted that data-driven policy will still guide its decisions.
The Bank of Japan, meanwhile, made the decision on Tuesday to maintain interest rates below zero and provided no indication as to when it might leave negative levels.
But for the time being, investors seem to be ignoring those warning signs as US stocks continue to rise. The case for or against quicker and earlier cuts will probably be aided by Friday’s update on the Fed’s preferred inflation indicator, the Personal Consumption Expenditures Price Index.
As more businesses join BP in avoiding transits through the Red Sea in response to attacks on shipping in the crucial trade route, investors are also keeping a watch on oil prices. While Brent crude futures (BZ=F) traded above $79 per barrel, West Texas Intermediate (CL=F) edged higher to trade slightly below $74 per barrel.
