Mixed US Stock Market Awaits Fed Guidance

US stocks exhibited mixed performance as investors focused on the upcoming Federal Reserve minutes to gain insights into the future interest rate path. The market anticipates gradual rate cuts of 25 basis points, although weaker economic data might prompt more aggressive easing measures. The CME FedWatch tool suggests an 88% likelihood of a quarter-point cut. Meanwhile, the Dow Jones Industrial Average surged over 400 points, driven by these speculations and an upcoming inflation report.

Despite record highs for the S&P 500 and the Dow, concerns about potential economic slowdowns persist. The Fed's recent rate cut of 50 basis points in September reflects caution, with some members highlighting signs of economic deceleration. This includes rising consumer credit defaults and a potential slowdown in GDP growth. Market expectations also play a crucial role, with further rate cuts anticipated before year-end. However, Fed Chair Jerome Powell has ruled out another 50-basis-point cut before the US elections.

Amidst these developments, tech stocks like Nvidia have shown resilience, while Alphabet faced scrutiny over a potential breakup, affecting its stock performance. With inflation data on the horizon, markets remain cautious and closely aligned with the Fed's forthcoming decisions.