Why the Stock Market Has Risen Even With No Fed Rate Cuts
Despite no interest rate cuts so far in 2024, how has the stock market performed?
The stock market has been performing well despite no interest rate cuts so far in 2024. The S&P 500's recent returns have been driven by A.I. fever, with investors believing that artificial intelligence is ushering in a new technological age. This has been enough to keep the overall stock market averages rising. However, the rest of the market has been rather ho-hum. Nvidia, a company that makes chips and other infrastructure behind AI apps, has led the market upward, with its shares soaring more than 200 percent over the last 12 months.
What were the initial expectations for Federal Reserve interest rate cuts in 2024, and how have these expectations changed?
Initial expectations for Federal Reserve interest rate cuts in 2024 were that there would be six or seven rate reductions. However, these expectations have changed, and now it is likely that there will be only one meager rate reduction by the end of the year. This shift in expectations has not significantly impacted the stock market, which has continued to perform well, largely due to investor enthusiasm for artificial intelligence and the strong performance of tech companies like Nvidia.
What is the current likelihood of the Federal Reserve making an interest rate cut by the end of 2024, and how does this compare to earlier predictions?
The current likelihood of the Federal Reserve making an interest rate cut by the end of 2024 seems to be low, with the possibility of just one meager rate reduction. This is in contrast to earlier predictions in January 2024, when investors expected the Fed to trim rates six or seven times throughout the year. The stock market has been performing well despite the absence of rate cuts, mainly due to the excitement surrounding artificial intelligence and its potential impact on the technology sector. However, the overall market performance appears unimpressive when excluding the largest companies, particularly tech companies.