American Indices Look Impervious As US Fed Eludes Interest Rate Cuts Yet Again

American Indices Look Impervious As US Fed Eludes Interest Rate Cuts Yet Again

This goes against the general expectation of stakeholders, who have been looking forward to a rate cut. The interest rate has been retained in the bracket of 5.25–5.50 per cent.

Juviraj AnchilUpdated: Thursday, June 13, 2024, 10:29 AM IST
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The US Federal Reserve, after consultation in its most recent Federal Open Market Committee (FOMC) under the leadership of Fed Chair Jerome Powell held a meeting between June 12 and June 13, the central banking system in the largest economy decided to retain its interest rate.

Interest Rates Retained

This goes against the general expectation of stakeholders, who have been looking forward to a rate cut. The interest rate has been retained in the bracket of 5.25–5.50 per cent, a 23-year-high. This is for the seventh straight time, that the Fed has retained the rate.

However, despite this, the markets appear to have reacted to the development with less dismay than anticipated by some observers. In fact, the three major benchmark indices that are the symbols of Wall Street, namely, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite, ended the day's trade on Wednesday, June 13, on a relatively stable note.

The US Federal Reserve, after consultation in its most recent Federal Open Market Committee (FOMC) under the leadership of Fed Chair Jerome Powell held a meeting between June 12 and June 13, the central banking system in the largest economy decided to retain its interest rate.

The US Federal Reserve, after consultation in its most recent Federal Open Market Committee (FOMC) under the leadership of Fed Chair Jerome Powell held a meeting between June 12 and June 13, the central banking system in the largest economy decided to retain its interest rate. | AFP

Two of the aforementioned, S&P and Nasdaq, even closed in green. S&P ended the day 0.85 per cent or 45.71 points higher, at 5,421.03. It is to be noted that this index even scaled the high of 5,444.81 halfway through the day before closing.

Markets In Green

The technologically heavy Nasdaq had even better day with a rise of an impressive 1.53 per cent or 264.89 points, closing at 17,608.44. Here again, the marquee index scaled the mark of 17,715.81, halfway through the day.

Despite not ending the day in green like the other indices, Dow Jones did not have the worst end to the day, as the index declined by a marginal 0.091 per cent or 35.21 points, to reach 38,712.2. However, it needs to be noted that this index reached the mark of 39,021 in the early hours of the trade yesterday.

The technologically heavy Nasdaq had even better day with a rise of an impressive 1.53 per cent or 264.89 points, closing at 17,608.44. Here again, the marquee index scaled the mark of 17,715.81, halfway through the day.

The technologically heavy Nasdaq had even better day with a rise of an impressive 1.53 per cent or 264.89 points, closing at 17,608.44. Here again, the marquee index scaled the mark of 17,715.81, halfway through the day. | Image by Alexander Naumann from Pixabay

Although what might come to pass in the markets on June 13 and beyond cannot necessarily be predicted, this development could be seen in line with the trend of businesses digging into their reserves and relying on their stocks to keep the ball rolling rather than waiting for a decline in interest rates.

However, in the near future, more precisely in September, there are still hopes, that with the subsequent decline in inflation numbers, the Fed might after all pull the scissors to make that, all-important cut.

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