Wall Street has also been closely monitoring the latest statements from companies to get a better sense of where the economy is headed. The manufacturing industry, meanwhile, continued contracting under the impact of higher interest rates. The resilient employment market showed some signs of weakening as slightly more workers applied for unemployment last week than expected. retailers unexpectedly strengthened in May. Overall, investors contended with a mixed batch of economic updates this week. The preliminary reading from the University of Michigan’s survey also suggested consumer sentiment is strengthening more than expected. That’s key for the Federal Reserve, which doesn’t want high expectations for inflation to kick off a vicious cycle that worsens it. consumers are also paring back their expectations for upcoming inflation. The Fed’s latest meeting was preceded on Tuesday by a report showing that inflation continued cooling in May.Ī closely watched survey on Friday suggested U.S. Most of Wall Street’s gains have come from big tech stocks, the ones that would benefit most from easier rates. The S&P 500 has ripped nearly 15% higher this year because of rising hopes that the Federal Reserve will end its hikes to interest rates soon as inflation cools and that the economy will avoid a severe recession. “The idea that the Fed is pausing and taking time to see what the cumulative effect is on the economy from a policy standpoint, is the right move for them,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. Its goal has been to slow the economy to cool inflation but not so much that it causes a recession. Traders are also mostly convinced that will be the last increase of the year, according to data from CME Group.īefore taking its pause this week, the Fed had raised interest rates at 10 straight meetings since March 2022. The central bank’s next meeting will run from July 25-26, and Wall Street is betting that it will raise rates. The Fed held its benchmark interest rate steady at its meeting this week, but warned that it could raise rates twice more this year.
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