U.S. stocks surged on Friday (Nov. 21) after a Federal Reserve official signaled that the central bank may still cut interest rates next month…
Crude oil prices fell sharply as the U.S. continued to push forward a peace plan aimed at ending the war between Russia and Ukraine.
At the close, the Dow Jones Industrial Average jumped 493.15 points, or 1.08%, to 46,245.41. The Nasdaq rose 0.88% to 22,273.08, and the S&P 500 gained 0.98% to finish at 6,602.99.
Wall Street investors turned optimistic after New York Fed President John Williams said the Fed could cut interest rates in the near term without derailing the fight against inflation. Following his comments, futures-market bets on a rate cut at the Fed’s December meeting climbed to nearly 70%, up from 40% the previous day.
“I believe monetary policy remains somewhat restrictive, although less so than before the recent rate cuts. Therefore, I see room for further adjustments in the short term to bring the federal funds rate closer to a neutral stance, maintaining a balance between the goals of supporting growth and controlling inflation,” Williams said.
Observers noted that such remarks from a highly influential Fed member like Williams signal that the central bank’s leadership is leaning toward a rate cut in December. If so, it would mark the Fed’s third rate reduction this year. Investors believe looser monetary policy could support U.S. economic growth and justify the currently high valuations of tech stocks.
Technology shares—especially artificial intelligence (AI) stocks—were heavily sold earlier in the week due to concerns that valuations had become overstretched and that the Fed might not cut rates at its upcoming meeting.
Despite Friday’s strong rebound, all three major U.S. stock indexes ended the week with steep losses: the S&P 500 fell 2%, the Dow Jones dropped about 2%, and the Nasdaq declined 2.7%.
Jay Hatfield, CEO of Infrastructure Capital Advisors, said the pullback was “completely normal and seasonal after each corporate earnings season.” He added that “the bubble component of the market is being squeezed out,” and “the real question now is when the market will bottom out.”
In the energy market, January Brent crude in London fell 1.29% to close at USD 62.56 per barrel. January WTI crude in New York dropped USD 1.59 to USD 58.06 per barrel.
Oil investors turned pessimistic as the administration of President Donald Trump continued to push for a peace deal between Russia and Ukraine.
According to a leaked plan, the U.S. has proposed that Ukraine cede the territories of Crimea, Luhansk, and Donetsk to Russia and commit to never joining NATO. The plan also states that Kyiv would receive “credible” security guarantees, while its armed forces would be capped at 600,000 troops.
However, analysts expressed skepticism about the plan, saying the conditions are unlikely to be accepted by Ukraine.
A report from Saxo Bank noted that crude oil prices are under downward pressure due to U.S. efforts to broker peace between Russia and Ukraine. Even so, prices are also being supported by U.S. sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, which took effect on Nov. 21.
Leave a Reply