Federal Reserve Chairman Jerome Powell said last night that if the U.S. economy performs as expected, interest rates will be cut by another 50 basis points, which is a hawkish statement. However, U.S. stocks turned positive after a brief decline, with the Dow Jones and S&P indexes continuing to hit new closing highs. Except for the Fed, the other three major indexes all closed slightly higher.
U.S. Federal Reserve Chairman Powell delivered a speech at the American Business Economics Association on Monday, saying that if economic development is in line with expectations in the future, monetary policy will shift to a more neutral stance.
Most notably, during the question-and-answer session after the meeting, Ball said:
If the U.S. economy performs as expected, that means there will be more rate cuts this year, for a total of another 50 basis points.
That is to say, if there are no unexpected events, the Fed will most likely cut interest rates by one basis point at each of the remaining two meetings (November and December), pouring cold water on investors who expect a larger rate cut.
As for labor, although the employment situation in the United States has cooled significantly in the past year, Powell believes that it is still solid at present and believes that the inflation target of 2% can be achieved without seeing the job market cool further. (The U.S. Department of Labor will announce the number of new non-farm employment in September this Friday (October 4)
FedWatch: The probability of a 1 basis point rate cut in November is 63.3%
According to the CME FedWatch tool, the probability of the Federal Reserve cutting interest rates by 1 basis point at its November meeting has risen to 63.3%, while the probability of a 2 basis point cut has dropped to 36.7%.
The US dollar index rose, and US stocks turned from red to positive
After Powell doused expectations for a sharp rate cut, the U.S. dollar index rose to 100.86 at one point, and has now slightly declined to 100.77.
As for the U.S. stock market, although there was a brief decline at the opening last night, it subsequently turned around. The Dow Jones and S&P indices continued to hit new closing highs. Except for the Philadelphia Stock Exchange, the other three major indices all closed slightly higher.
The Dow Jones Industrial Average rose 17.15 points, or 0.04%, to 42,330.15.
The S&P 500 rose 24.31 points, or 0.4%, to 5,762.48.
The Nasdaq Composite Index rose 69.58 points, or 0.4%, to 18,189.17
The Philadelphia Semiconductor Index fell 44.17 points, or 0.85%, to close at 5,173.06.
