The American Federal Reserve has not set any new records on the stock market in the near future, leading investors to shift their focus towards alternative sources. Stock market traders had high expectations for interest rate cuts by the Fed, but after inflation exceeded expectations and the Fed Chair rejected further rate cuts, it became clear that rates would remain high. This has caused interest rates on government bonds to rise, impacting debt servicing and the housing market.
Despite disappointment in the stock market, the reaction has been moderate, with the S&P 500 still up over 5% since the beginning of the year. The strong performance of American companies and hype around artificial intelligence have been supporting factors. However, there is a shift in focus towards expecting real profits from these companies rather than just speculation.
The “Magnificent Seven” tech companies are under pressure to deliver on their AI plans and show real profits. While Meta has shown positive results, there is still uncertainty around high expectations. The market is closely watching the Fed’s next interest rate decision and the performance of other tech giants like Alphabet and Microsoft.
The American consumer is a key factor driving the economy, but there are concerns about consumer spending slowing down and its impact on inflation. The low savings rate in USA indicates that consumers are using up their savings quickly, which could lead to a slowdown in consumption and inflationary pressure in the future.
Overall, markets are adjusting to a new economic narrative with a broader foundation supporting S&P 500. The Fed’s stance on interest rates and performance of companies like Amazon and Apple will provide further insights into market trajectory. Investors are navigating uncertain waters with a focus on real profits and economic fundamentals rather than speculation.