On Wall Street, stock prices rose on Monday, despite the risk of a temporary shutdown of U.S. federal agencies, as investors hope for further cuts in interest rates by the U.S. central bank.
The Dow Jones increased by 0.15 percent to 46,315 points, while the S&P 500 rose by 0.26 percent to 6,661 points, and the Nasdaq index by 0.48 percent to 22,591 points.
The indices rose, although there were no significant news to drive the market.
Conversely, the focus is on events in Congress as there is a risk of a temporary shutdown of federal agencies if Republican and Democratic representatives do not reach an agreement on further funding for federal agencies in the coming days.
– Investors are focused on positive news – data indicating the resilience of the economy and hope for further interest rate cuts. Indeed, there is a risk of a shutdown of federal agencies, but it is believed that this problem will be resolved quickly, so the focus will again be on corporate earnings, monetary policy, and investments in artificial intelligence – explains Lindsey Bell, a strategist at 248 Ventures.
The Fed cut interest rates by 0.25 percentage points two weeks ago due to weakness in the labor market, and investors hope that the central bank will continue to lower the cost of money by the end of the year.
However, the latest macroeconomic data calls this into question as it shows that the economy is growing steadily, so monetary stimulus is not necessary, while inflation remains significantly above the Fed’s target levels.
Beth Hammack, president of the Fed branch in Cleveland, stated yesterday that the central bank must maintain a restrictive monetary policy to curb inflation.
Alberto Musalem, president of the Fed branch in St. Louis, said that he is open to further rate cuts, but that the Fed must be cautious and keep rates high enough to pressure inflation, which is still nearly a full percentage point above the target levels of around 2 percent.
Despite this, the market estimates that there is almost a 90 percent certainty that the Fed will further cut rates at the next meeting.
European stock prices also rose yesterday. The London FTSE index increased by 0.16 percent to 9,299 points, while the Frankfurt DAX rose by 0.02 percent to 23,745 points, and the Paris CAC by 0.13 percent to 7,880 points.
Caution in Asian Markets
The MSCI index of Asia-Pacific stocks was up 0.2 percent at 7:00 AM and is on track for a gain of about 5.5 percent this month.
This morning, stock prices in India, Australia, and South Korea slipped between 0.1 and 0.2 percent, while in Japan, Shanghai, and Hong Kong, they rose between 0.1 and 0.4 percent.
Caution prevails in Asian markets as new data showed that the Chinese economy continues to weaken. Indeed, the PMI index of manufacturing activity was at 49.8 points in September, higher than in previous months, but this is the sixth consecutive month it has remained below the 50-point level, which indicates a decline in activity.
