Will a Rate Cut Be Enough to Sustain Wall Street’s Record Run?

Wall Street is at a standstill, awaiting the Federal Reserve’s afternoon announcement, which is widely expected to deliver the first interest rate cut of the year. This long-awaited move has dominated market sentiment for months, yet the decision itself is less important than what comes next. Investors are laser-focused on what Fed officials will say about the probability of future cuts. The consensus is that rates will continue to be lowered through this year and into the next to support a slowing job market.

The Fed’s position is complicated by conflicting economic signals. Reports show that finding a job has become more difficult, which could force the central bank to prioritize employment over the persistent threat of inflation. However, inflation has not yet fallen below the Fed’s 2% target, and officials are concerned that lower rates could push prices higher. The risk of this balancing act is clear: if Fed Chair Jerome Powell hints at fewer rate cuts than the market anticipates, Wall Street’s record-setting rally could face a significant challenge. The upcoming release of the Fed’s projections for interest rates and inflation will provide crucial clues about its long-term outlook.

Key Movers and Global Signals

While the broader market paused, individual stocks saw notable movement. Workday surged by 8.8% after a major investment firm announced a multi-billion-dollar stake and expressed support for its management. The company also recently increased its stock buyback program, a move that pleased investors. Similarly, Lyft saw a significant jump of 14.3% on news that it will launch an autonomous ride-hailing service with a key partner.

On the downside, food giant General Mills saw its stock decline by 1.3% despite reporting a better-than-expected profit. Its revenue only roughly matched forecasts, and the company warned that upcoming investments would affect its profit in the next fiscal year. Meanwhile, RCI Hospitality Holdings dropped 8% following accusations from New York’s attorney general regarding tax evasion.

The day also marks the initial public offering of online ticket marketplace StubHub, which will begin trading on the New York Stock Exchange. The company’s stock was priced at $23.50 per share for its debut.

A Look Beyond U.S. Borders

The cautious mood on Wall Street was reflected in markets abroad. Indexes were mixed across Europe and Asia. In Japan, the Nikkei 225 slipped from its record high, driven by data showing a significant drop in exports to the U.S. The bond market also mirrored this sentiment, with the yield on the 10-year Treasury easing slightly. These global movements underscore the interconnectedness of financial markets and the pervasive influence of the Fed’s decision, which will ultimately set the tone for markets worldwide.