The volatility that dominated markets in the early part of the month sharply reversed in the last week, driven by growing expectations of interest rate cuts that have bolstered investor risk appetite.
The latest inflation statistics for August seem to give the green light for the Federal Reserve to proceed with an interest rate cut, which is highly likely to occur Sept. 18.
The remaining question concerns the size of the cut — whether it will be 25 basis points or 50 basis points.
Risk assets experienced a significant rebound, with the S&P 500 recovering losses from the prior week. Treasury yields fell substantially and the dollar weakened, driving the price of gold to fresh all-time highs.
Additionally, the week saw the first televised debate between Vice President Kamala Harris and former President Donald Trump, with polls indicating Harris outperformed, further widening her lead.
Back to gold
Gold mining stocks rallied, marking their best one-day performance in six months Thursday as gold prices hit new highs. A macro strategist highlighted the striking similarities between today’s economic landscape and the turbulent 1970s when gold had a similar bull run.
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Back to Harris
Solar stocks surged after Harris mentioned the industry in her debate with Trump, bolstering confidence in clean energy policies. Several renewable energy companies saw sharp gains, too.
Good news for small caps
In an exclusive interview with Benzinga, a small-cap expert from global financial services firm Lazard forecast a 30%-50% rally in the Russell 2000, the index of funds with a market capitalization of between $250 million and $2 billion, fueled by declining interest rates and strengthening economic conditions. With the Federal Reserve poised to cut interest rates, small-cap stocks are anticipated to close the performance gap with larger-cap counterparts.
And good news for self-driving cars
Research firm S&P Global Mobility projects U.S. autonomous vehicle sales will reach 230,000 units by 2034 following renewed progress at Alphabet’s Waymo and GM’s Cruise. Advancements in technology and regulatory approvals are expected to drive the industry forward, boosting consumer adoption and market penetration.
Benzinga is a financial news and data company headquartered in Detroit.
Insight into Economic Expectations
The recent shift in market volatility and the anticipation of interest rate cuts signal a positive outlook for investors. The potential cut in interest rates by the Federal Reserve is expected to boost investor confidence and stimulate risk appetite.
Impact of Political Events on Market Trends
The televised debate between Vice President Kamala Harris and former President Donald Trump had noticeable effects on market sentiment. Harris’s performance and subsequent lead in polls influenced market dynamics, showcasing how political events can impact investor perceptions and asset prices.
Opportunities in Different Sectors
The rally in gold mining stocks and solar energy companies highlights opportunities for investors in specific sectors. Understanding the correlation between political discourse and market movements can guide investment decisions in industries experiencing positive momentum.
Future Outlook for Small-Cap Stocks
The forecasted rally in small-cap stocks, driven by potential interest rate cuts and economic conditions, presents an opportunity for investors to consider diversifying their portfolios. Monitoring market trends and expert insights can guide strategic investment decisions for maximizing returns.
Growth Potential in Autonomous Vehicle Market
The projected increase in U.S. autonomous vehicle sales indicates a growing market for innovative technologies. As regulatory approvals and technological advancements progress, investors can explore opportunities in the evolving automotive industry to capitalize on changing consumer preferences and market dynamics.
