Wall Street’s main indexes were flat as investors stepped onto the sidelines ahead of the Federal Reserve’s highly anticipated first interest rate cut in more than four years.
Federal Reserve policymakers are increasingly attentive to the U.S. labor market as they prepare for a policy-setting meeting later this month.
Consumer spending increased solidly in July, arguing against a half-percentage-point interest rate cut from the Federal Reserve next month.
Wall Street’s stock indexes increased substantially on Friday, with the S&P 500 index climbing towards a record high, after Federal Reserve Chair Jerome Powell said “the time has come” to reduce interest rates.
The U.S. Federal Reserve will cut interest rates by 25 basis points at each of the remaining three meetings of 2024.
U.S. inflation rose 2.9% in July versus a year ago, which fell below expectations in a result that likely paves the way for the Federal Reserve to finally begin cutting interest rates next month.
A sharp slowdown in the U.S. job market that touched off days of global stock-market turmoil also fueled speculation the Federal Reserve may not wait until its next scheduled meeting.
While maintaining interest rates at their highest point in over 20 years on Wednesday, the Federal Reserve made a suggestion that lower borrowing costs may soon be implemented by policymakers due to slight recent improvements in inflation.
Fed Governor Christopher Waller and New York Fed President John Williams both voiced that description of the shortening horizon toward looser monetary policy.
The Nasdaq and the S&P 500 hit record highs on Wednesday as strength in Nvidia and other mega stocks supported Wall Street’s winning streak.