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Markets Surge on Fed Rate Cut Hopes & Strong Data
28 Nov
Summary
- Stock indexes hit 1.5-week highs, driven by semiconductor strength.
- Optimism for Fed rate cut rises to 81% on dovish comments.
- Weekly jobless claims fell to a 7-month low, boosting confidence.
US stock markets experienced a significant upward trend today, with major indexes like the S&P 500 and Dow Jones Industrials reaching their highest levels in approximately 1.5 weeks. This rally was notably supported by strong performance in semiconductor stocks, which lifted the broader market sentiment. Despite a late-day pullback after the Chicago PMI report indicated a 17-month low in manufacturing activity, the overall market trajectory remained positive.
The driving force behind this optimism appears to be the increasing likelihood of a Federal Reserve interest rate cut. Market sentiment has improved considerably as bond yields have decreased amid weaker economic indicators and dovish remarks from Fed officials. Consequently, the probability of a rate cut at the upcoming December FOMC meeting has surged to 81%, a stark increase from just 30% last week.
Additional support for the stock market came from encouraging economic data released today. Weekly initial jobless claims fell unexpectedly to a seven-month low, signaling a robust labor market. Furthermore, new orders for capital goods in September, a key indicator of business investment, saw a greater-than-expected increase, reinforcing a positive economic outlook.
