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By Staff Reporters

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Wall Street is gearing up for rate cuts. Yep! Twenty months after the Federal Reserve began a historic campaign against inflation, investors now believe there is a much greater chance that the central bank will cut rates in just four months than raise them again in the foreseeable future.

Interest-rate futures indicated last week a roughly 60% chance the Fed will lower rates by a quarter-of-a-percentage point by its May 2024 policy meeting, up from 29% at the end of October, according to CME Group data. The same data has pointed to four cuts by the end of the year. And, investors, battered by the Fed’s efforts to slow the economy, have reacted by driving the S&P 500 up nearly 9% this month. That is despite the wagers reflecting different possible paths for the economy, not all of them favorable for stocks.

Of course, investors look ahead to the release this week of key US inflation data that could provide a guide for the Federal Reserve’s plans for interest rates going into the new year.

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Read: Can AI save accounting? (the Journal of Accountancy)

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Here is where the major benchmarks ended:

• The S&P 500 Index was down 8.91 points (0.2%) at 4,550.43; theDow Jones Industrial Average^® (DJI) was down 56.68 points (0.2%) at 35,333.47; the NASDAQ Composite^® was down 9.83 points (0.1%) at 14,241.02.
• The 10-year Treasury note yield (TNX) was down about 10 basis points at 4.387%.
• CBOE Volatility Index^® (VIX) was up 0.23 at 12.69.

Transportation shares were among the weakest performers Monday, and energy was also soft behind a drop in crude oil futures. Weakness in many retail stocks suggested some concern over consumer spending given high interest rates and slower job growth. The S&P Retail Select Index (SPSIRE) fell 0.6% but is still up 8.2% for the month. Consumer discretionary and real estate shares were among the few gainers.

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Filed under: "Ask-an-Advisor", Accounting, Alternative Investments, Financial Planning, Funding Basics, Glossary Terms, Investing, Taxation, Touring with Marcinko | Tagged: Accounting, AI, banks, CME Group, CPA, CPAs, DJIA, energy, Federal Reserve, FOMC, inflation, interest rates, Marcinko, markets, metals, NASDAQ, oil, Russell Index 2000, RUT, S&P 500, SPSIRE, stock markets, TNX, utilities, VIX |