US stocks took a brief pause on Thursday, but optimism over artificial intelligence and rate-cut expectations remain. The Nasdaq reached 20,000 for the first time this week, while the S&P 500 hit another new record high. Gains are driven by anticipation of further rate cuts from the Federal Reserve, with markets pricing in just two more quarter-point cuts in 2025.
Donald Trump’s election victory has left investors uncertain about the economy in 2025. Will he implement blanket tariffs on US imports, and how will the Fed react? For now, markets expect just two more cuts this year, totaling 100 basis points of easing.
In contrast, the European Central Bank (ECB) lowered borrowing costs for the fourth time this week, with expectations of further rate cuts next year. The Swiss and Canadian central banks also made significant rate cuts this week.
The global interest rate picture has led to a strong dollar index gain of 1% this week, its largest weekly jump in a month. The S&P 500 is on track for annual gains over 20%, with futures pointing to a firmer open. Broadcom’s shares are up 14% after the semiconductor company forecast quarterly revenue above estimates, driven by booming demand for custom AI chips.
Key developments to watch include US import and export prices, which will provide more direction to US markets later on Friday.
Source: https://www.reuters.com/markets/us/global-markets-view-usa-2024-12-13