Wall Street Rises Ahead of Fed’s Monetary Policy Announcement

Investors Prepare for Next Week’s Fed Meeting, Expected to Cut Rates by 25 Basis Points.

All three major Wall Street indices closed higher on Friday, driven by expectations that the Federal Reserve (Fed), which meets next week, may cut rates more than anticipated.

The Dow Jones Industrial Average, made up of 30 major companies, gained 0.72% to close at 41,393.78 points. The S&P 500, comprising 500 stocks, rose 0.54% to 5,626.02 points, while the tech-heavy Nasdaq Composite climbed 0.65% to 17,683.98 points.

Investors are gearing up for the Fed’s meeting next week, where it is expected that the central bank will cut its highest rates since 2001 by 25 basis points. However, some media outlets have revived the discussion about a potential 50 basis point cut. Comments from former New York Fed President William Dudley, suggesting a more aggressive cut, along with an analysis by Nick Timiraos in The Wall Street Journal, shifted market expectations.

According to CME Group’s FedWatch tool, investors are largely betting on a 25 basis point cut, with a 55% probability for that adjustment, while 45% expect a 50 basis point cut.

This week, data showing inflation stirred appetite for risk assets, leading to significant gains for major tech companies. Nvidia stood out with a 15.80% surge, followed by Tesla (+9.28%), Amazon (+8.81%), and Microsoft (+7.19%).

Regarding the major indices, both the S&P 500 and Nasdaq posted positive performances, with five consecutive days of gains. The Dow Jones accumulated a 2.60% increase, while the S&P 500 rose by 4%, and the Nasdaq advanced by 5.94%.