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The
Fed left interest rates unchanged on Wednesday, acknowledging
slowing inflation and indicated lower borrowing costs were on
the horizon, causing the Dow Jones Industrial Average to notch
its second straight record high close on Thursday.
Money markets see a 79% chance of at least a 25-basis point rate
cut as soon as March 2024, up from about 50% before Wednesday's
policy announcement, while almost fully pricing in another cut
in May 2024, according to CME Group's FedWatch tool.
"Because we are seeing clear disinflation taking place, the
market is starting to think about cutting cycles in the same way
it was thinking about the hiking cycle," said Sphia Salim, head
of European rates research at BofA Global Research.
"We are far from neutral and inflation is moving fast, so maybe
central banks are behind the curve and ultimately may need to
converge back to neutral quite rapidly."
The dovish turn of events caused equities to rally recently,
with the benchmark S&P 500 and the tech-heavy Nasdaq eyeing six
straight weeks of gains.
U.S. Treasury yields fell below 4% to multi-month lows, with
yield on the benchmark 10-year Treasury note last standing at
3.9166%. [US/]
Markets will now parse the S&P Global Composite Flash PMI data
for December, due after the opening bell.
At 7:01 a.m. ET, Dow e-minis were up 124 points, or 0.33%, S&P
500 e-minis were up 11.75 points, or 0.25%, and Nasdaq 100
e-minis were up 50.75 points, or 0.30%.
Among stocks, Alteryx added 1.4% before the bell as Piper
Sandler upgraded the analytics automation firm's shares to
"neutral" from "underweight".
Costco Wholesale rose 1.7% after the retailer topped Wall Street
estimates for first-quarter results due to demand for cheaper
groceries.
Chip stocks including Intel, Micron Technology and Advanced
Micro Devices added between 0.9% and 1.7%.
First Solar and Enphase Energy added 2.4% and 3.3%,
respectively, as Jefferies started coverage of the solar
companies with a "buy" rating.
(Reporting by Shristi Achar A and Johann M Cherian in Bengaluru;
Additional reporting by Shashwat Chauhan; Editing by Shounak
Dasgupta)
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