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Fed Rate Cut Hopes Fuel Market Rally
26 Nov
Summary
- Stocks rose globally on anticipation of a Federal Reserve interest rate cut.
- US economic data showed slower retail sales and declining consumer confidence.
- Traders now estimate a 90% chance of a rate reduction next month.
Global stock markets experienced a notable upswing on Tuesday, with major US indices and European bourses advancing. This rally was primarily fueled by escalating investor confidence in an impending interest rate cut by the Federal Reserve next month. The prospect of monetary easing provided a significant boost, overshadowing lingering concerns about the valuation of artificial intelligence stocks.
Supporting the market's optimism, recent US economic data painted a picture of a cooling economy. Retail sales showed slower-than-expected growth in September, and the Conference Board's consumer confidence index fell to its lowest point in seven months, reflecting increased shopper anxiety over job market conditions and future household incomes. These indicators appear to have strengthened the Federal Reserve's rationale for implementing a rate cut.
Consequently, market participants have significantly increased their expectations for a December rate reduction, with traders now estimating approximately a 90 percent chance, a sharp rise from around 35 percent just last week. This shift in sentiment has driven broad market gains, though specific companies like Nvidia saw a dip amidst reports of potential competition in chip usage.
