Nov 7, 2023 - Economy & Business
Stocks rise again, helped by Fed pause hopes
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Financial markets seem increasingly sure the Federal Reserve won't raise rates at its next few meetings.
Why it matters: The growing consensus that the Fed is on pause has helped drive a sharp rebound in stock prices over the last several sessions.
Driving the news: Odds derived from prices in the Fed Funds futures market suggest traders think there's a roughly 90% probability that the Fed leaves its target rate — now 5.25%-5.5% — untouched at its next meeting on Dec. 13.
- In September, the same market put the odds that the target rate would sit in that range after the December meeting at just 50%.
- The increased certainty follows the central bank's decision last week to leave rates alone, with chair Jerome Powell sounding optimistic about the economy.
- That decision was bolstered by a welcome slowdown in the labor market reported on Friday.
State of play: The S&P 500 rose for the sixth straight day on Monday as it posted a modest gain of 0.2%.
- The benchmark index is up 4% in November and nearly 14% for the year.
Yes, but: Some don't think the upswing in stocks will last.
- "Last week's rally should fizzle out over the next week or two as it becomes clear the growth picture does not support either Fed cuts or a significant acceleration in [earnings-per-share] growth in the near term," wrote Mike Wilson, chief U.S. equity strategist at Morgan Stanley, in a note to clients on Monday.
