The Fed kept its main interest rate at a two-decade high for more than a year in hopes of slowing the US economy enough to stifle inflation. Last week, it swung its focus toward protecting the job market and cut the federal funds rate by a larger-than-usual half of a percentage point. Critics say it may be moving too late.
A strong job market would help Cintas, which provides uniforms, fire extinguishers and other products to businesses. It rose 1.6 per cent after reporting stronger profit for the latest quarter than analysts expected. Cintas also increased its forecasts for profit and revenue over the full fiscal year.
Trump Media & Technology Group jumped 10.2 per cent and was on track for its first back-to-back gain in two weeks. The stock had been struggling amid speculation about when former President Donald Trump may sell some of his shares in the company behind the Truth Social network, now that he is free to do so.
On the losing end of Wall Street was Stitch Fix, which tumbled 37.6 per cent after the online fashion styling service said its revenue in the current quarter could be 15per cent to 17per cent weaker than a year earlier. Its stock has dropped below $US3 from $US100 early in the pandemic.
KB Home fell 5.4 per cent after reporting profit for the latest quarter that was just shy of analysts’ expectations. The homebuilder, though, said orders picked up in August as mortgage rates came down.
A separate report released Wednesday morning said sales of new homes across the country slowed in August, but not by as much as economists feared.
Besides lowering mortgage rates, rate cuts by the Fed could also make it more affordable to get loans for a car or to buy things on credit cards and give the economy a boost. Everyone on Wall Street is already convinced the Federal Reserve will cut the federal funds rate at its next meeting in November, the only question is by how much.
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Traders are betting on a nearly 60 per cent probability for another cut of half of a percentage point, according to data from CME Group. The Fed traditionally moves rates by only a quarter of a percentage point at a time.
In the bond market, the yield on the 10-year Treasury rose to 3.77 per cent from 3.73 per cent late Tuesday. The two-year yield, which moves more closely with expectations for the Fed, was holding at 3.54 per cent, where it was late Tuesday.
In stock markets abroad, indexes rose 1.2 per cent in Shanghai, fell 1.3 per cent in South Korea and slipped 0.2per cent in London.
AP
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