US Stock market prediction: S&P 500, Nasdaq, Dow Jones to be impacted by US Fed rate decision
US Stock market will have one final litmus test with the coming week’s Federal Reserve meeting, as investors await the central bank's guidance on interest rate cuts, as per a report.
The Nasdaq Composite index breached 20,000 for the first time ever in the past week, another milestone for equities in a year during which the tech-heavy index has gained 32 per cent while the S&P 500 has risen about 27 per cent, Reuters reported.
Expectations that the Fed will cut interest rates have supported those gains. But while the central bank is expected to lower borrowing costs by another 25 basis points next week, investors have moderated their bets on how aggressively policymakers will move next year due to robust economic growth and sticky inflation.
Bond yields, which move inversely to Treasury prices, have risen in recent sessions as a result, taking the benchmark U.S. 10-year yield to a three-week high of 4.38 per cent on Friday. While stocks have pushed higher despite the rise in yields, the 10-year is approaching the 4.5 per cent level some investors have flagged as a potential trip-wire for broader market turbulence.
«Anything that results in an expectation that maybe the Fed moves even more slowly from here than investors were expecting could create a little bit of downside for stocks,» said Jim Baird, chief investment officer with Plante Moran Financial Advisors.
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