Wall Street’s Enthusiasm for Tech Stocks Lifts Market Indices:
Stock markets rallied Wednesday as investors flocked to major U.S. tech companies,
breaking a two-day losing streak.
This came after an inflation report boosted expectations that the Federal Reserve would continue cutting interest rates.
Meanwhile, Treasury bonds recorded a decline in value.

Contents

Substantial Gains in Tech Stocks

Inflation and the Future of Interest Rates

Market Expectations and Risky Assets

Central Banks and Monetary Policy

Substantial Gains in Tech Stocks Drive Market Indices to Record Highs

The Nasdaq 100 index rose by 1.9%, reaching a new record high,
while the S&P 500 climbed by 0.8%, nearing its peak.
Broadcom led the gains following a report indicating a new AI deal with Apple.
Additionally, shares of the “Magnificent Seven” (Meta, Amazon, Tesla, Nvidia, Apple, Alphabet, Microsoft) surged,
with Tesla, Amazon, and Meta (Facebook’s parent company) hitting all-time highs.

Inflation and the Future of Interest Rates

A Bureau of Labor Statistics report showed that the Consumer Price Index (CPI)
increased by 0.3% in November for the fourth consecutive month.
The core CPI, which excludes volatile food and energy costs,
rose by the same amount, aligning with forecasts.
According to Skylar Winand, Chief Investment Officer at Regan Capital,
this report gives the Federal Reserve a “green light”
to reduce interest rates by 25 basis points at its December meeting.

Traders expect a quarter-point rate cut in the upcoming meeting.
There is ongoing debate over the number of potential cuts in the coming year.
However, U.S. government policies could contribute to inflationary pressures.

Market Expectations and Risky Assets

Upcoming inflation data, such as producer prices and personal consumption expenditures,
is expected to offer additional insights into the economic trajectory.
Meanwhile, the VIX index, a measure of market volatility, fell below 14 points, signaling near-term market calm.

Jeff Schulz from ClearBridge Investments noted that declining inflation supports
risky assets and boosts stocks during one of the most substantial seasonal periods of the year.

Central Banks and Monetary Policy

The U.S. dollar strengthened following reports that Chinese leaders are
considering allowing their currency to weaken, anticipating higher tariffs under a second Trump administration.
The Canadian dollar also rebounded after hitting a four-and-a-half-year low,
as policymakers signaled readiness to slow the pace of monetary easing.
On Wednesday, the Bank of Canada cut interest rates by 50 basis points, marking its second significant reduction.

Other central banks are also expected to lower interest rates,
with some potentially cutting them faster and more profoundly than the Federal Reserve.
The European Central Bank and the Swiss National Bank will likely follow suit on Thursday.
Meanwhile, China’s two-day Central Economic Work Conference is expected to outline next year’s policies,
following signals of stimulus plans from top leaders in Beijing.

Separately, oil prices rose after reports of potential new U.S. sanctions
on the Russian oil trade, which could tighten market supply.

Wall Street’s Enthusiasm for Tech Stocks Lifts Market Indices

Wall Street&#8217;s Enthusiasm for Tech Stocks Lifts Market Indices

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Wall Street’s Enthusiasm for Tech Stocks Lifts Market Indices