Wall Street has reached new heights this Friday against a backdrop of expectations of Fed rate cuts at the end of July. The DJ still gained 0.9% to 27,332 pts, having crossed for the first time the 27,000 pts Thursday, while the S & P500 passes the bar of 3,000 pts to 3,013 pts (+0.46%). The Nasdaq rises 0.59% to 8.244 pts. As a cause for the day to more gains, producer prices rose by 0.1% in June in the United States according to the Labor Department, as expected, but excluding food and energy, the CPI is stable, against an expected increase of 0.2% by analysts.
Jerome Powell, president of the Federal Reserve, has once again prepared the ground for the rate cut at the end of the month, in front of US senators, thanks to the slowdown in business investment in the United States because trade conflicts and the downturn in global growth.
On the second day of his six-month congressional hearing, Powell adopted the same line as the day before, saying the Fed would act “appropriately” to support growth. These statements reinforced expectations of a decline in the fed funds rate on July 31, following the next meeting of the monetary policy committee of the US central bank. Powell reiterated that three major risks were threatening the US economy’s record-breaking expansion phase: trade uncertainty, slowing international growth and low inflation.
After two days of hearings by the Fed Chairman, interest rate futures now include a 100% probability of an easing of at least 1/4 of a point on July 31, which would be the first rate cut at the end of the year.
The federal funds rate is currently 2.25-2.5%, having been raised for the last time in December – a rate increase then severely criticized by the President Donald Trump, who has since stepped up front-runs against the Fed.