Wall Steet Indexes edge higher post Powell’s speech

With investors analysing earnings reports and remarks from Federal Reserve officials for hints about how long the American central bank will maintain high interest rates before beginning to reduce them, Wall Street’s major indexes edged higher on Wednesday.

Amidst anticipations that the Fed may be done raising interest rates, Treasury yields have sharply declined from their peak, which has helped the S&P 500 (.SPX) and the Nasdaq (.IXIC) record their longest winning streaks in two years on Tuesday.

According to the CME Group’s FedWatch tool, markets are now pricing in rate cuts as early as May. The likelihood of a cut of at least 25 basis points has increased to nearly 49% from roughly 41% a week earlier.

Since most investors believe that the Fed won’t likely raise interest rates again until the end of the year, there is an underlying optimism in the capital markets. As the fourth quarter comes to a close, this could pave the way for an extremely powerful rally.

Nevertheless, investors have been on edge due to cautious remarks made by a number of central bank officials in recent days. Fed Governor Michelle Bowman raised the prospect of additional rate hikes given the strength of the US economy. In contrast, during his opening remarks at the US central bank statistics conference, Fed Chair Jerome Powell refrained from discussing monetary policy. On Thursday, the Fed chair is expected to speak at another conference.