"Stocks have rallied with expectations that the Federal Reserve will cut its main interest rate for the first time this year at its meeting next week. Such a move would give the economy a kickstart, and mortgage rates have already dropped in anticipation of it. Expectations for a cut have built as recent reports suggested the U.S. job market could hit the precise balance that Wall Street has been betting on:"
"A lot is riding on whether that bet proves correct. Stocks have already soared on it. And if the Fed ends up cutting fewer times than traders expect, including three this year, the market could retreat in disappointment. That's even if everything else goes right and the economy does not fall into a recession and President Donald Trump's tariffs don't send inflation much higher."
U.S. stocks traded near record levels with the S&P 500 close to its all-time high while the Dow slipped and the Nasdaq gained. Markets have rallied on expectations that the Federal Reserve will cut its main interest rate at its upcoming meeting, and mortgage rates have fallen in anticipation. Recent reports suggest the job market could slow enough to justify cuts without triggering a recession, while consumer near-term inflation expectations held at 4.8% according to preliminary University of Michigan data. Longer-term inflation expectations ticked up but remain below April levels amid tariff concerns.
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