As Rate Cut Hopes Decline; US Markets See a Slowdown

With rising inflation, and an all-important election around the corner, businesses are said to be looking at other alternatives to expanding their businesses other than a debt driven model. Currently, the US interest rates fixed by the US Federal Reserve is pegged between 5.25 per cent to 5.50 per cent.

US Markets End in Flat

This, according to reports, is making entities resort to cash and stock deals, instead of taking up debt at sky-high interest rates.

This understandably appears to have had an impact on the stock markets in the US. Major US indices, including Dow Jones Industrial Average, S&P 500 and Nasdaq, are trading low and ended the day on Wednesday, without any unremarkable numbers. The Dow Jones ended the day with 0.44 per cent gain on 39,056.39. Meanwhile, S&P ended the day flat, with a 0.00058 per cent decline. In addition, Nasdaq ended the day with 0.18 per cent decline, ending the day at 16,302.76.

Bank Shares Surge in Green

These developments are being attributed to companies and their apparent proclivity to use their stocks and existing cash to make deals instead of carrying out debt. In fact, according to Reuters, major mergers and acquisitions carried out using all stock transactions have amounted to USD 263.6 billion, or about 24 per cent of the overall announced volumes.

In addition, this is also a time, when a lot of mergers and acquisition are expected to happen. According to Morgan Stanely, the overall volumes are expected to rise 50 per cent in 2024. This is largely attributed to pent-up demand from last year when volumes touched a decade-low, and in addition the hope of interest rates being reduced was also alive.

Meanwhile, amidst all of these happenings, major banking shares have been trading in green. The biggest bank on the planet, JP Morgan & Chase, ended the day's trade on 8 May, with a 2.03 per cent gain, at USD 195.65 per share. Meanwhile, Bank of America ended the day with a 0.34 per cent decline. Goldman Sachs, another big name, also ended the day a 0.71 per cent uptick, ending the day USD 446.95.