Analysis-Rate cut prospects could bolster US stocks as investors await earnings, elections

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Federal Reserve,Monetary Policy,Jerome Powell

The prospect of near-term interest rate cuts is bolstering the case for investors to remain bullish after a run in U.S. stocks that may soon be tested by...

NEW YORK - The prospect of near-term interest rate cuts is bolstering the case for investors to remain bullish after a run in U.S. stocks that may soon be tested by upcoming corporate earnings reports and growing political uncertainty.

“The Fed is getting closer to a rate cut,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “I believe we’ll see a rate cut in September and another one in December.”Powell told the Senate Banking Committee that inflation had been improving in recent months and that "more good data would strengthen" the case for looser monetary policy.One early test comes on Thursday, with the release of U.S. consumer price data for June.

Keith Lerner, co-chief investment officer at Truist Advisory Services, wrote in a recent midyear outlook that he remains positive on U.S. stocks, although he expects markets to trade “in a choppier fashion” following a strong first half. "Smaller-cap companies need capital to survive in a lot of instances and this higher cost of capital makes their business really challenged,” he said. “A lower cost of capital would certainly help those companies."

However, “if the Fed is forced to cut aggressively in response to a macro or market disruption, we would expect stock performance to suffer,” they wrote.Michael Moore Reveals His ‘Heartbreaking’ Conclusion About BidenThe money will go toward paying off Trump’s legal fees and relocating her family after facing ‘countless death threats’Canadian stocks like BCE offer ultra high yields, making them attractive to earn passive income.

 

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