Despite a strong performance in 2024, U.S. stock markets experienced a decline today as Federal Reserve Chair Jerome Powell indicated a deceleration in interest rate cuts. The S&P 500 and Nasdaq Composite Index both fell significantly, while the Canadian TSX also dropped.
Stock-market investors have enjoyed a banner 2024 despite the decline in the markets today. The age-old question is where the markets go from here. Markets in the U.S. fell today after U.S. Federal Reserve chair Jerome Powell said the Fed intends to slow the pace of interest-rate cuts. Most Fed officials' projections newly project two rate reductions next year, down from four in their last meeting. The S&P500 fell 2.95 per cent to 5,872, while the Nasdaq Composite Index was down 3.
56 per cent, to 19,392. The Nasdaq had traded above 20,000 for the first time Dec. 11. Canada's benchmark Toronto Stock Exchange (TSX) Composite Index fell 2.24 per cent to 24,557, making its return 17.65 per cent so far this year. If the TSX regains ground lost since early December, when it was up more than 23 per cent year-to-date, it would be on track for its best year since 2009, when it returned 30.69 per cent. Investor confidence in 2024 was likely fuelled by the prospect, and then the reality, of Bank of Canada interest-rate cuts at a time when the country’s inflation rate steadily declined to 1.9 per cent in November from a 39-year high of 8.1 per cent in June 2022. Five Bank of Canada interest-rate cuts lowered the central bank’s key interest rate to 3.25 per cent, down from five per cent in May. Economists, such as Central 1 chief economist Bryan Yu, told BIV that they expect the central bank to lower that interest rate further. The U.S. Federal Reserve today reduced that country's key interest-rate by 25 basis points, to a range between 4.25 per cent and 4.5 per cent, a two-year low. It lowered rates by 50 basis points in September and then by 25 basis points last month. Those moves helped U.S. markets surge even more than Canadian ones despite the rate cuts in total adding up to be cumulatively less. Various professional money managers in Vancouver told BIV that they have disproportionately weighted client funds in U.S
FEDERAL RESERVE INTEREST RATES STOCK MARKET US ECONOMY CANADA ECONOMY
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