Stock Market Reaches Highest Point During Trading Session on Federal Reserve Day: Current Equity Market Updates
The Federal Reserve, led by Chair Jerome Powell, has made a move to cut interest rates in response to slowing economic activity. The decision comes as a quarter-point cut, bringing the range to 4.00% to 4.25%.
This move is not unexpected, as recent indicators suggest that growth of economic activity moderated in the first half of the year. The Fed's Summary of Economic Projections indicates a similar move at the next Fed meeting in October and another 25-basis-point cut in December.
The decision to cut rates has had an impact on the stock market, with the S&P 500 and the Nasdaq Composite suffering due to their greater exposure to consumer discretionary and tech stocks. Meanwhile, small-cap stocks have continued to rally.
In other news, the ongoing US-China trade negotiations have taken an interesting turn. A potential deal being negotiated could see Oracle (ORCL), Silver Lake Technology Management, and Andreessen Horowitz combine to hold an 80% stake in TikTok. The ban on Nvidia's (NVDA) RTX Pro 6000D product by China's internet regulator has also been a point of contention. Nvidia, a key player in the stock market, has been considered a key trade counterpart, particularly relating to the export of its advanced AI chips like the H20. The ban is expected to be used by President Xi Jinping as leverage in trade negotiations with U.S. President Donald Trump.
The ban on Nvidia's product has caused a drop in the company's stock prices, as well as orders from companies such as ByteDance and Alibaba. However, StubHub (STUB) has managed to navigate these turbulent waters, completing its initial public offering (IPO) after a pause to gauge the effects of President Trump's tariffs. StubHub priced its offering of approximately 34 million shares at $23.50 per share, raising about $800 million. The company opened at $25.35 in its market debut, hit an intraday high of $26.34, and closed at $22.00.
The housing market has also seen its fair share of volatility. Housing starts decreased by 8.5% month over month in August, according to the Census Bureau. Building permits, considered a better indicator of broad housing demand, decreased by 3.7% in August, extending a downtrend due to high mortgage rates. Eric Teal, Comerica Wealth Management Chief Investment Officer, suggests a 2% decline in mortgage rates is needed to jump-start the housing market.
Inflation has moved up and remains somewhat elevated, while job gains have slowed, and the unemployment rate has edged up but remains low. The yield on the 2-year U.S. Treasury note inched up to 3.549% after the announcement, while the yield on the 30-year U.S. Treasury bond edged higher to 4.669%.
As the economic landscape continues to shift, it will be interesting to see how these developments unfold in the coming months.
