This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
The Fed has been the story of the year for investors.
And this week, Jay Powell & Co. gave markets a preview of the tale they expect to tell in 2024: lower interest rates.
After pushing interest rates to 22-year highs this summer, our Chart of the Week shows lower rates offering light at the end of the tunnel to investors by next spring.
In so many quarters the astronomical rates — the highest in memory for anyone under a certain age — have been a ball and chain. And of course, this was by design. The Fed’s rates are meant to help slow an overheated economy down.
But early this year, investors began sniffing out the Fed’s future changes.
The normally rate-sensitive tech sector — mostly the megacap “Magnificent Seven” stocks — shrugged off the Fed’s rising rates, climbing an AI-fueled rocket ship and anticipating what Powell confirmed this week.
With the Fed’s pivot now coming into clear focus, however, the Magnificent Seven no longer need to play Atlas to the index.
Relief is on the way. Even for those stocks, sectors, and investors that doubted the signal markets were sending for much of the year.
The Fed is done. The pressure is off. A new chapter begins.
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