1. Inflation steady at 2.7% strengthens rate cut expectations. 2. S&P 500 surged over 1%, hitting new all-time highs. 3. Ninety-four percent probability for a rate cut in September. 4. Investors injected $4.3 billion into U.S. equities last week. 5. Small caps and lower quality stocks may benefit from favorable conditions.
The firm predictions of a rate cut coupled with an unlikelihood of inflation pressures typically lead to bullish sentiment and buying in the S&P 500, similar to past behaviors observed during previous rate cuts. For instance, in 2015, the S&P experienced an uptick during speculated rate easing.
The combination of firm rate cut expectations and consistent inflation data suggest a clear bullish trend for S&P 500, attracting significant investor interest and inflows, which could foster positive price movements.
The imminent Federal Reserve meeting in September frames a quick horizon for impacts, as rate cuts could provide immediate market lifts, echoing short-term reactions observed after past rate change announcements.