Well, it looks like the stock market thinks the Fed is going to cut that interest rate after all!
Yes, ladies and gentlemen, the Dow Jones Industrial Average just surpassed 40,000 points for the first time in history.
The Dow Jones Industrial Average eclipsed 40,000 points for the first time in its history Thursday as Wall Street cheered slowing inflation and potential for lower interest rates.
The iconic stock index was up roughly 111 points shortly before 11 a.m. Thursday, reaching about 40,020 points …
The Dow is up 6 percent since the start of 2024 as investors eagerly await Federal Reserve rate cuts, which could add more fuel to the stock market.
The Nasdaq and S&P 500 both hit record highs this week as well.
And while the stock market seems to know those rate cuts are coming, I wouldn't be so fast to make that assumption.
From investing.com:
The latest consumer inflation data has been broadly well received by financial markets, but Federal Reserve Bank of New York President John Williams said this news, while positive, is not sufficient for the U.S. central bank to cut interest rates sometime soon …
Data released on Wednesday showed that U.S. consumer price growth had slowed as anticipated to 3.4% on an annualized basis in April, while so-called ‘core' CPI, which excludes volatile energy and food prices, increased 3.6% annually, the smallest year-on-year gain since April 2021.
The softer inflation tone is 'kind of a positive development after a few months where the data were disappointing,' Williams said in an interview with Reuters on Wednesday, and 'the overall trend looks reasonably good.'
However, he is still not sufficiently confident that price pressures are moving sustainably to the Fed's 2% inflation target before lowering short-term borrowing costs.
Monetary policy is 'restrictive' and 'is in a good place,' Williams said. 'I don't see any indicators now telling me ... there's a reason to change the stance of monetary policy now, and I don't expect that, I don't expect to get that greater confidence that we need to see on inflation progress towards a 2% goal in the very near term.'
So it might be a while before those rates come down, though I still think we should celebrate the Dow hitting 40,000 points.
Are we almost out of the woods from that whole Covid debacle which rocked our financial system?
Or are our leaders about to screw it up worse?
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