Calmer Waters on Wall Street: Markets Pour Cold Water on Hopes for Interest Rate Cuts

After the U.S. stock markets embarked on a record-breaking rally, Friday seems to be the time for a breather. Initially, investors speculated on sooner interest rate cuts, driven by the signaling effect of a weakening inflation. However, this hope proved short-lived. By now, many market observers expect only one key interest rate cut this year. Members of the U.S. Federal Reserve have recently indicated that the fight against inflation and achieving the targeted two-percent goal could become a drawn-out affair. At times, the Dow Jones Industrial touched the historic high of 40,000 points before settling with a slightly positive trend at 39,908.59 points, which suggests a possible weekly gain of around one percent. The broadly-based S&P 500 also moved upward by 0.10 percent to 5,302.35 points, while the technology-oriented Nasdaq 100 recorded an increase of 0.14 percent to 18,584.56 points. Stuart Cole, Chief Macro Economist at Equiti Capital, also supports the turning point thesis: 'The markets are now at a crossroads as the central banks shape their policy strongly based on data. The future of the markets will crucially depend on which data is published next.' In the individual stock showcase, there were mixed developments. Applied Materials, a big player in semiconductor manufacturing equipment, recorded a marginal price increase of 0.1 percent despite significant quarterly figures and was praised by JPMorgan analyst Harlan Sur for encouraging business figures and robust corporate targets. However, DXC Technology caused a stir after announcing disappointing annual targets for revenue and adjusted profit—its shares promptly fell by 19 percent. On the other hand, Reddit is on the rise; its shares climbed by 17 percent, buoyed by a newly forged partnership with OpenAI, which allows the integration of the platform's content into the popular chatbot ChatGPT—a potential growth driver for the company's licensing business. The restaurant chain Cracker Barrel suffered a setback, drastically cutting its quarterly dividend by 80 percent to invest in the renewal of the brand and its branches. Consequently, the shares lost 15 percent. Meanwhile, at Gamestop, the roller coaster ride continues: The stock price fell by 25 percent after lower net revenues were reported and a potential issue of up to 45 million new shares was announced to fund acquisitions or investments.