Wall Street is stable due to less optimism about rate cuts

The main indexes of Wall Street were trading steady on Tuesday, as optimism over possible rate cuts on the part of the Federal Reserve next year, with investors on tenterhooks awaiting further comments from central bank authorities.

After a strong rally last week, fueled by falling Treasury yields, equities have lost momentum in recent days as investors await commentary for signs that will push back expectations that Interest rates have peaked.

Minneapolis Federal Reserve President Neel Kashkari dispelled hopes of an early rate cut, saying the central bank may have to do more to bring inflation back to its 2% target.

Chicago Fed chief Austan Goolsbee acknowledged the downward trend in inflation but maintained that price pressures have not yet stopped.

“We believe that the first rate cut will not take place in the second quarter of next year, but in the third”said Sam Stovall, chief investment strategist at CFRA Research.

Putting further pressure on stocks, U.S. Treasury yields rebounded from multi-week lows hit the previous session, ahead of this week’s big bond auctions that could determine whether there is enough demand for U.S. government debt.

On Tuesday, market players will analyze comments from Fed Governor Christopher Waller and New York Fed President John Williams for more clues about the path of the central bank’s interest rates.

Fed Chairman Jerome Powell’s remarks will steal the spotlight on Wednesday.

Uncertainty over the timing of potential rate cuts and some bleak corporate forecasts for the fourth quarter have cast doubt on whether there could be a year-end rally for stocks.

The Dow Jones Industrial Average gained 0.03%, to 34,106.82 points, while the S&P 500 added 0.05%, to 4,368.45 points. The Nasdaq Composite rose 0.48%, to 13,583.88 points.

Among the 11 main sectors of the S&P 500, energy led the declines after a 2% drop in crude oil prices following mixed economic data from China.

Source: Reuters