Wall Street is poised for new heights as futures indicate a positive market opening on Wednesday.
This surge follows the release of new U.S. inflation data, which has heightened expectations of a potential cut in the Federal Reserve’s benchmark interest rate next month.
Futures for the S&P 500 and Nasdaq advanced by 0.2%, while the Dow Jones Industrial Average saw a rise of 0.3%.
Both the S&P 500 and Nasdaq reached record highs on Tuesday, contributing to growing optimism in the market.
This rally is partly due to relief surrounding an extended truce in President Donald Trump’s trade war with China, coupled with hopes that borrowing costs in the U.S. may decrease.
A reduction in interest rates has the potential to enhance investment and stimulate economic growth, as it would lower borrowing costs for U.S. households and businesses looking to purchase homes, vehicles, and equipment.
President Donald Trump has persistently advocated for rate cuts to bolster the economy, often expressing his frustrations with the Fed chair publicly.
Despite these pressures, the Federal Reserve has approached the situation with caution, concerned that Trump’s tariffs could escalate inflation rates once again.
Before the Fed’s next meeting, which is set to conclude on September 17, there is anticipation for one more inflation report and an update on the U.S. job market.
The most recent jobs report surprised many, revealing numbers that fell short of economists’ projections.
Some critics argue that the U.S. stock market appears overvalued following a significant recovery since April, raising expectations for companies to consistently produce strong profit growth.
In corporate news, Gildan Activewear announced plans to acquire HanesBrands for $2.2 billion.
This deal, which will see HanesBrands shareholders receive nearly 20% of the combined entity, will provide Gildan with access to several renowned brands, including Hanes and Maidenform.
Following the announcement, HanesBrands’ shares dropped over 9% in pre-market trading after experiencing a 28% surge the previous day, when rumors about the acquisition began to circulate.
Meanwhile, the Mediterranean restaurant chain Cava saw its shares plummet 24% in after-hours trading after reporting weaker-than-expected same-store sales for the second quarter and revising its full-year guidance lower.
Cava’s executives attributed the decline in same-store sales to the “honeymoon effect,” a term used to describe the diminished demand following the initial opening of new locations.
In Asia, stock markets rallied, with Tokyo’s Nikkei 225 index closing 1.3% higher, marking a new record at 43,274.67.
Stephen Innes of SPI Asset Management noted that Asian markets were operating in “risk-on mode,” buoyed by a robust session in the U.S. after inflation data indicated more stable levels.
Hong Kong’s Hang Seng index surged 2.6% to 25,613.67, while the Shanghai Composite index gained 0.5% to finish at 3,683.46.
Japan’s market was particularly active, reacting positively to the confirmation that U.S. import duties on its exports will remain stable at 15%.
The South Korean Kospi index climbed 1.1% to 3,224.37, while Australia’s S&P/ASX 200 index decreased by 0.6% to 8,827.10.
Taiwan’s Taiex increased by 0.9%, and India’s Sensex rose 0.5%.
Bangkok’s SET index also made gains, climbing 1% after the Bank of Thailand reduced its key interest rate by 0.25 percentage points to 1.5%.
In Europe, midday trading saw Germany’s DAX increase by 0.9%, and the CAC 40 in Paris rose by 0.6%.
Britain’s FTSE 100 edged upwards by 0.1%.
In the energy sector, U.S. benchmark crude oil futures declined by 52 cents to $62.65 per barrel, while Brent crude dropped 44 cents to $65.68 per barrel.
The U.S. dollar slightly weakened against the Japanese yen, trading at 147.51 compared to 147.84 earlier in the week, while the euro rose to $1.1713 from $1.1677.
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