Fed Chair Jerome Powell set the stock market’s mood on Wednesday’s trading. All four of the major indices – Dow Jones, Nasdaq (QQQ), S&P 500 (SPY), and Russell 2000 (IWM) closed higher.
Powell said that the Fed may afford to be slightly more cautious with its interest rate cutting. He reflected on September’s stronger economy, where the first rate cut stimulated growth. As a result, inflation rates did not subside, and job growth continued.
The market response diverged. Tech firms like Salesforce (CRM), Nvidia (NVDA), Oracle (ORCL), and Amazon (AMZN) traded higher on the day. Investors accumulated growth companies, regardless of their valuations. In addition, Marvel Technology (MRVL) posted strong results. It increased its Q4 revenue forecast above market expectations.
Resource stocks fell. Rio Tinto (RIO), Albemarle (ALB), BHP Group (BHP), and Freeport-McMoRan (FCX) are among the slumping stocks. Investors are adjusting to the stronger U.S. dollar, which decreases the attractiveness of raw materials and foreign currencies.
Your Takeaway
The Fed is hinting that rates need not fall this month. This enables the central bank to monitor the impact of past rate cuts on the economy. Next month, the chances are still high that the Fed will lower rates by 25 bps. As stocks continue to climb to all-time highs, they are betting that interest rates will keep falling.
