Fed Rate Cuts on the Horizon, but Can the Economy Keep Up?
From Inflation to Job Growth: Why the Market’s Still Holding Its Breath
Last week, the S&P 500 had its fourth straight day of gains, erasing almost all of September’s rough patches. Before we break out the champagne, let's remember that September is usually the worst month for the market, so maybe the bulls shouldn't celebrate just yet.
But things are looking up!
This week's inflation data came in as expected, giving the Federal Reserve a green light to consider lowering short-term interest rates next week. Historically, when rates drop and the economy's still growing, markets are happy.
The Consumer Price Index (CPI) has settled at an annualized 2.5%, which is exactly where Chairman Powell wanted it to start easing up on monetary policy. For context, changes in interest rates affect the economy slowly—like steering a cruise ship rather than a speedboat. Meanwhile, the Producer Price Index (PPI), which measures wholesale inflation, rose by 0.2% in August. …