Throughout the last month, markets grew increasingly confident that the Federal Reserve would cut interest arrest by at least 25 bps in this month’s meeting. The weak jobs report, the yearly jobs revision, and moderating inflation are reasons that Fed Chair Jerome Powell is dovish.
The bad news is that the Commerce Department reported on August 30, 2024, that prices rose moderately last month. However, the U.S. consumer spending increased meaningfully in July. These data points reaffirm that the Fed does not need to cut rates by 50 bps.
Treasury bond yield jumped after the report.
Investors may bet on specialty retail stocks thriving. Best Buy (BBY), for example, jumped from below $90 to close above $100. In the last quarter, the firm raised its outlook. Risks of a recession dropped, increasing this tech retail’s prospects.
Investors may buy Lowe’s (LOW) and Home Depot (HD). Consumers will spend more on do-it-yourself projects related to home repairs and upgrades.
Automobile stocks rose in response to the strong consumer spending data. However, the stock rally in Stellantis (STLA), Ford Motor (F), and General Motors (GM) may not last. Average vehicle prices are in the six-figure range. Consumers cannot afford expensive EVs or gas-powered trucks. When those firms post weaker profits, their stock will resume their downtrend.
