Traders Expect Fed Will Remain Aggressive in Easing Policy
1 hr 35 min ago
Traders on Wednesday upped bets that the Federal Reserve would continue to aggressively cut interest rates this year after the central bank began its long-awaited easing cycle with a 50-basis point cut.
The Fed on Wednesday lowered its federal funds rate target range to between 4.75% and 5% from 5.25% to 5.5%. The cut met many investors’ expectations that the central bank would begin this rate-cutting cycle with aggressive action as it seeks to bolster a cooling labor market while sustaining inflation’s downward drift toward its 2% annual target rate; the market’s perceived odds of a 50-point cut rose from just 14% a week ago to more than 60% earlier this week.
Wall Street took Wednesday’s policy pivot as a sign of more aggressive cuts to come. Traders now see a more than 50% chance that the Fed will lower its federal funds rate target range by another 75 basis points to between 4% and 4.25% by the end of the year. With only two Fed meetings left—one in November and one in December—that implies another 50-point cut at one of those meetings.
Fed officials don’t expect this year’s rate reductions to be quite that dramatic, according to their quarterly economic projections. Nine of the 19 Federal Open Market Committee (FOMC) members who submitted forecasts estimated the policy rate would end the year between 4.25% and 4.5%. Only one member expects the next two cuts to match the market’s expectations. Two members don’t expect to cut rates at all later this year.
Policymakers expect interest rates to be slightly lower in the near term relative to their prior estimates, which were published in June. The FOMC’s consensus is that the rate will stand at 3.4% at the end of 2025, down from an estimate of 4.1% in June.
Powell Focuses on Fed’s Dual Mandate in Press Conference
1 hr 50 min ago
In his prepared statements during a press conference following the Fed’s decision announcement, Chair Jerome Powell focused on the balance of the central bank’s dual mandate.
“We know that reducing policy restraint too quickly could hinder progress on inflation,” he said. “At the same time, reducing restraint too slowly could unduly weaken economic activity and employment. And considering additional adjustments at the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook and the balance of risks.”
There’s ‘Still Room’ on the Nvidia Bandwagon, Analyst Says
2 hr 56 min ago
Nvidia’s (NVDA) share price may have already more than doubled in 2024, but analysts at William Blair say it isn’t too late for investors to get in on the action.
The firm initiated coverage of the semiconductor titan with an “outperform” rating on Wednesday, declaring there’s “still room on this train.”
William Blair notes Nvidia’s data center revenue is expected to more than double in fiscal 2025 after tripling in fiscal 2024. The firm sees Nvidia as the clear frontrunner in the AI space with as much as a one- to two-year lead over its competitors. For that reason, Nvidia’s GPUs and AI systems should continue to drive industry-leading revenue and earnings growth, the firm said.
After Nvidia shares slumped following the company’s second-quarter earnings last month, Bank of America called out an “enhanced buy opportunity,” and Bernstein analysts recently called the company the “best way to play AI.” All but one of the 23 firms surveyed by Visible Alpha hold a “buy” rating on Nvidia, with an average price target of $151.73.
Nvidia shares were down 0.6% at $114.87 in recent trading, continuing a slight pullback this week after the stock popped last week on encouraging comments from CEO Jensen Huang.
Small Caps Have Lagged Since Last Fed Meeting
3 hr 24 min ago
Major U.S. stock indexes have been on a rollercoaster ride since the Fed’s last meeting on July 31, when officials decided to maintain the influential fed funds rate at a 23-year high.
The S&P 500 has gained nearly 4% since its close on July 30, outpacing the gains of the Nasdaq Composite and Dow Jones Industrial Average over that period. The Russell 2000 small-cap index is down nearly 2% since July 30.
Rate cuts are often seen as a positive for companies and their stocks as long as the economy avoids a recession. Small-cap stocks are thought to benefit more than their large-cap peers from rate cuts because they’re more likely to hold floating-rate debt. The Russell 2000 index was down about 0.1% Wednesday afternoon ahead of a widely anticipated rate cut by the Fed.
Intuitive Machines Jumps on Big NASA Contract
5 hr 13 min ago
Shares of Intuitive Machines (LUNR) skyrocketed more than 50% Wednesday, a day after the space travel support firm received a contract worth up to $4.82 billion from the National Aeronautics and Space Administration (NASA).
The company announced the agreement will have Intuitive Machines provide “communication and navigation services for missions in the near space region, which extends from Earth’s surface to beyond the Moon.” The deal includes the deployment of lunar relay satellites for NASA’s planned Artemis moon exploration program, which the company believes “is a strategic element in its vision to commercialize lunar activities.”
Intuitive Machines shares were up 55% at $8.40 in late-morning trading and have more than tripled since the start of the year. They reached a peak intraday level of $13.25 on Feb. 21, soon after the company reported its IM-1 mission Nova-C class lunar lander had successfully launched on SpaceX’s Falcon 9 rocket
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GE Vernova Shares Hit Another Record High
6 hr 47 min ago
GE Vernova (GEV) shares hit another record high in early trading Wednesday after closing higher yesterday for the seventh straight session.
The stock has benefitted this week from favorable comments from analysts. Analysts at Barclays initiated their coverage of the stock with an “overweight” rating and price target of $250, while Bank of America analysts upgraded GE Vernova to a “buy” rating and raised their price target to $300 from $200.
The banks argue that the stock remains undervalued compared to multi-industry peers due to the global energy giant’s greater exposure to the gas and electrification sectors, which sit poised for growth as demand for AI data centers and electric vehicle charging infrastructure accelerates in coming years.
According to our technical analysis, which you can read here, investors should be mindful of a potential short-term retracement, given the relative strength index points to extremely overbought conditions in the stock.
Important retracement levels to watch on GE Vernova’s chart sit at $200 and $185, while the measuring principle projects an upside price target of $250.
Market Expectations for Big Rate Cut Holding Steady
8 hr 38 min ago
Traders are holding firm in their belief that the Federal Reserve will start its rate-cutting cycle with a bang.
Early Wednesday, fed fund futures trading data indicated a 63% likelihood that the Fed will cut its benchmark rate by half a percentage point and a 37% chance of a quarter-point cut, according to the CME Group’s FedWatch tool. The likelihood of a half-point cut that’s being priced in is little changed from Tuesday, but up from about 50% on Friday and 15% a week ago.
The lack of market consensus heading into a Fed meeting is unusual, and it means that whatever the central bank decides to do Wednesday could prove disappointing to a large group of market participants.
The Fed has held the influential fed funds rate at a two-decade high since mid-2023 as part of an effort to tame inflation. Fed officials have made clear that rate cuts are coming as inflation has moderated and the labor market cools, but they haven’t commented on the pace or depth of the expected easing.
In addition to the decision on rates Wednesday, the Fed’s policy committee will release its quarterly economic projections, which include forecasts from committee members on where the fed funds rate will be in the future. Those projections will be closely scrutinized by investors, as will the committee’s statement and Chair Powell’s comments at the post-meeting press conference, for signals on what the Fed might do in subsequent meetings.
Michael Nagle / Bloomberg / Getty Images
The decision on rates and the economic projections will be released at 2:00 p.m. ET, with Powell’s press conference to follow half an hour later.
Microsoft Price Levels to Watch
8 hr 56 min ago
Microsoft (MSFT) shares, which are riding a seven-session winning streak, are rising again in premarket trading Wednesday.
Gains this week have come as the company hiked its quarterly dividend by 10% and approved a $60 billion stock buyback. In addition, Microsoft and the world’s largest asset manager, BlackRock, announced plans late Tuesday to launch a $30 billion AI infrastructure fund to build data centers and energy projects aimed at meeting the growing demands for the technology’s computing power.
The stock may potentially be carving out a head and shoulders top, a chart formation that predicts a bullish-to-bearish trend reversal.
Investors should monitor important resistance levels on Microsoft’s chart at $448 and $468, while eyeing key support areas at $410 and $385.
Read the full technical analysis piece here.
Major Index Stock Futures Slightly Higher
9 hr 26 min ago
Futures tied to the Dow Jones Industrial Average were up 0.1%.
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S&P 500 futures were up also up 0.1%.
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Nasdaq 100 futures were up 0.2%.
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Read More: Stocks Close Lower as Investors Digest Fed’s Rate Cut Decision