VGK - With Fed Rate Cuts On The Horizon Equity Markets Soar Dollar Weakens 10-Year Treasury Yield Falls Below 4% | Benzinga
The Federal Reserve delivered what the markets wanted on Wednesday — its cycle of rate hikes is likely over and rate cuts can be expected in 2024. Market reaction on Thursday continued to express investors’ delight that the six-week rally in equities can now be extended.
Effectively pivoting to a dovish bias, the Fed remained a little cautious on inflation, but its so-called “dot-plot” forecast pointed to the likelihood of 75 basis points of rate cuts next year.
“Chair [Jerome] Powell says the Fed is done — probably — but still doesn't want to talk about when they'll ease. But we're sticking to our forecast of 150 basis points in rate cuts next year, starting in March or May,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Market Reaction On Thursday
Interest rate-sensitive assets outperformed, with small-cap stocks soaring and Treasury yields dropping.
Overnight, the Russell 2000 index of small-caps jumped 3.5% compared with a 1.4% gain on the S&P 500. The iShares Russell 2000 ETF (NYSE: