The US stock market surged on Thursday, marking the most promising month for investors this year. Their confidence persisted as they continued to anticipate interest-rate cuts, particularly following reports indicating a stable reading of consumer inflation, which remained more or less consistent.
At 3.2 per cent, inflation levels were considered "cool" by the Federal Reserve, which typically aims for a steady rate of around 2 per cent. Despite this, the Fed is currently not contemplating an immediate hike but rather potentially considering a cut. Reports indicated that the Fed's preferred inflation measure hit its lowest point in over two years.
Moreover, the US economy is projected to expand at a rate of 5.2 per cent, surpassing earlier estimates of 4.9 per cent. These figures come amid prior concerns of inflation escalation, which have since been proven unfounded. However, borrowing costs for consumers remain relatively high due to past interest rate hikes.
Consumer spending has been notably robust, with Thanksgiving Day sales and Cyber Monday deals combining to exceed a cumulative total of over $15 billion. Last-minute online retail sales alone surged to a record-breaking $15 million per minute, reports revealed.
The Dow Jones Industrial Average demonstrated a notable increase of about 0.6 per cent, almost reaching a gain of 200 points. Likewise, the S&P 500 and the Nasdaq Composite, known for its tech-heavy components, showed modest gains of around 0.2 per cent. These stock indices are approaching the end of November trading with the possibility of closing at fresh 2023 highs.
Analysts at Yahoo Finance noted that market optimism stems from the belief that the Federal Reserve has concluded its interest rate hikes for the current cycle, potentially paving the way for rate cuts. The release of the PCE index, the Fed's favored inflation metric, meeting expectations, further solidified this sentiment. The market interprets this data as a sign that the Fed may shift toward rate cuts sooner than initially anticipated.
In addition, market attention is drawn to the OPEC+ meeting held online, initially postponed due to resistance from smaller African producers against Saudi Arabia and Russia's proposal for more supply cuts. Oil prices observed a third consecutive rise on the prospect of a potential agreement during the meeting, with both WTI and Brent crude futures increasing by about 0.7 per cent.
(With Agency Inputs)