Highlights
Stocks rallied for a third consecutive day Tuesday amid rising hopes for Federal Reserve rate cuts. The Dow Jones industrial average advanced 1.4 percent, the S&P 500 rose 0.9 percent and the Nasdaq gained 0.7 percent. US Treasury yields, the dollar, and oil prices all fell.
A Bloomberg report that White House aide Kevin Hassett is the leading candidate to succeed Fed Chair Jerome Powell spurred additional expectations of Fed accommodation when Chair Jerome Powell's term ends in May 2026. Hassett is a Trump loyalist and proponent of low rates. That news added to a series of comments from sitting Fed policy-makers on successive days suggesting a greater openness to rate cuts starting in December. After all this, the CME FedWatch tool shows markets pricing in an 85 percent chance of a rate cut in December, up from around 40 percent a week ago. That is an extraordinarily quick shift.
In economic news, consumer confidence came in notably weaker than expected for November with consumers expressing rising concern over the job market. Retail sales came in on the soft side for September while producer prices matched expectations.
Most sectors were better on rate cut hopes. The Magnificent Seven were mostly higher, paced by Google while Nvidia lagged. US Treasuries had a good day on rate cut hopes despite a 5-year note sale showing disappointing demand.
A Bloomberg report that White House aide Kevin Hassett is the leading candidate to succeed Fed Chair Jerome Powell spurred additional expectations of Fed accommodation when Chair Jerome Powell's term ends in May 2026. Hassett is a Trump loyalist and proponent of low rates. That news added to a series of comments from sitting Fed policy-makers on successive days suggesting a greater openness to rate cuts starting in December. After all this, the CME FedWatch tool shows markets pricing in an 85 percent chance of a rate cut in December, up from around 40 percent a week ago. That is an extraordinarily quick shift.
In economic news, consumer confidence came in notably weaker than expected for November with consumers expressing rising concern over the job market. Retail sales came in on the soft side for September while producer prices matched expectations.
Most sectors were better on rate cut hopes. The Magnificent Seven were mostly higher, paced by Google while Nvidia lagged. US Treasuries had a good day on rate cut hopes despite a 5-year note sale showing disappointing demand.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
