Wall Street’s major indexes ticked higher on Wednesday, led by a rally sparked by hopes for lower US interest rates. The S&P 500 rose 0.3%, while the Dow Jones Industrial Average climbed 1% and the Nasdaq composite added 0.1%. Treasury yields eased in the bond market as expectations reached a virtual consensus that the Federal Reserve will cut its main interest rate for the first time this year.
Lower interest rates are expected to boost investment prices and the economy by making it cheaper for US households and businesses to borrow. This is particularly beneficial for companies like homebuilders, which could see increased demand with lower mortgage rates.
Stocks of companies that can benefit from lower interest rates led the way, including PulteGroup and Lennar, which rose 5.4% and 5.2%, respectively. Brinker International also saw its stock price rise 1.6% after reporting stronger-than-expected results.
However, not all stocks were performing well. Grocery stores and delivery companies fell, including Kroger and DoorDash, as Amazon announced plans to offer same-day grocery delivery in over 1,000 cities.
The global rally continued beyond US borders, with stock indexes in Asia jumping and those in Europe rising modestly. The yield on the 10-year Treasury fell to 4.23% from 4.50% mid-July, a notable move for the bond market.
As hopes for lower interest rates grow, some are questioning whether the US stock market has become too expensive. However, delivering strong growth in profits can help offset this issue, as seen with Brinker International’s recent results.
Source: https://apnews.com/article/stocks-markets-inflation-73a3ac1beb306de02617ce7d6a836f89