Dow Jones, S&P 500: Stock Market Rises Today on Fed Rate Cut Speculation
In contrast, the energy sector struggled, with energy stocks dropping nearly 3%. Marathon Petroleum and Valero Energy posted losses of over 4%, as oil prices fell by nearly 4% following Monday’s rally. West Texas Intermediate crude dropped to $74.89 per barrel as concerns eased over potential disruptions in Middle Eastern oil supplies. The retreat in oil prices pressured energy stocks, contributing to the sector’s underperformance.
Earnings and Economic Data Under Scrutiny
With the third-quarter earnings season kicking off, investor attention is focused on corporate results and forward guidance. Major banks, including JPMorgan Chase and Citigroup, are set to report on Friday, with analysts projecting a 5% earnings growth rate for the S&P 500. PepsiCo led early earnings news, rising 1.2% after posting better-than-expected earnings, though it lowered its forecast for annual sales growth.
In the economic landscape, traders are closely watching inflation data scheduled for release on Thursday. The consumer price index (CPI) will be a key factor in determining the Federal Reserve’s next move. Market sentiment currently suggests an 89% probability of a 25 basis point rate cut at the Fed’s next meeting, a shift from expectations of a 50 basis point cut.
Chinese Stocks Hit by Stimulus Concerns
U.S.-listed shares of Chinese companies plunged after China’s economic planning agency failed to announce new stimulus measures. Alibaba, JD.com, and PDD Holdings fell between 6% and 7%, reflecting growing pessimism about China’s economic prospects. The MSCI China ETF dropped 10.7%, marking its worst day since 2011, as investor sentiment soured on the lack of significant economic support from Beijing.
Market Outlook: Awaiting Inflation Data for Fed Cues
The market’s short-term direction hinges on the upcoming inflation report, which could either reinforce or temper expectations of an interest rate cut. If inflation shows signs of cooling, traders are likely to grow more confident in a dovish shift from the Federal Reserve. However, strong economic data or persistent inflation could keep Treasury yields elevated and pressure stocks. For now, sectors sensitive to interest rates, like technology, remain positioned for gains, while energy may continue to struggle amid falling oil prices.