The stock market experienced a strong rebound on Friday, bringing an end to a three-day losing streak. This positive momentum was fueled by encouraging inflation data, which raised optimism that the Federal Reserve might cut interest rates in September.
As investors started to lose confidence in the tech-stock bull run, there was a shift away from mega-cap companies, leading to a three-day decline in the market. However, the tide turned on Friday when the personal consumption expenditures index for June met expectations, indicating that interest rates could potentially be reduced.
David Donabedian, chief investment officer of CIBC Private Wealth, stated that the PCE report supports the idea of future rate cuts by the Federal Reserve. Market expectations have also shifted, with the likelihood of a rate cut in September now being at 87.7%, according to the CME FedWatch Tool.
Looking ahead, most analysts predict that the Fed will implement two rate cuts this year, one in September and another in December. However, concerns over a significant economic slowdown have eased following better-than-expected second-quarter GDP data.
In terms of market movements, Dexcom, a medical device company, saw its stock price drop by over 40% due to disappointing guidance. On the other hand, small-cap stocks continued to perform well, with the Russell 2000 index rising by more than 1%.
In commodities, oil prices fell, with West Texas Intermediate crude dropping to $76.71 a barrel, and Brent crude falling to $80.66 a barrel. Gold prices, on the other hand, increased to $2,384.39 an ounce. The 10-year Treasury yield decreased to 4.19%, and Bitcoin rose to $67,852.
Overall, the market is eagerly awaiting the June jobs report for further insights into economic conditions. As the Federal Reserve considers its next moves, investors will continue to closely monitor economic data and policy decisions that could impact the financial landscape. Stay tuned to Extreme Investor Network for the latest updates and expert analysis on the world of finance.