Investment Week at a Glance
Stocks finished higher for the week. The Dow Jones Industrial Average rose 1.0%, the S&P 500 was up 1.2%, and the NASDAQ rose 2.2%. Foreign stocks (MSCI EAFE) were flat for the week. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 4.06%. (Data source: Wall Street Journal)
Fed Cuts Rates by 0.25%
The Federal Reserve finally made its much-anticipated rate cut, the first in 2025. Markets were anticipating a 0.25% rate cut and did not have too much of a reaction to the decision. One of the interesting headlines was that new board member Stephen Miran dissented and was in favor of a 0.50% cut. This now makes it back-to-back meetings with members dissenting, something that is usually not seen when these decisions are made. Markets are already pricing in a 92% probability of another cut in October.
Reasons for Rate Cut
Although the market was anticipating a rate cut and there was some excitement about the cut, there were some economic worries that made the Fed cut. A slowing labor market is obvious, with the average of the past 3 months’ payroll reports showing gains of 29,000 jobs per month. Another worry is that job openings are less than the number of unemployed people for the first time in over a decade, excluding the COVID-19 shock. Unemployment has also slightly ticked up over the past few months. Investors are hopeful this cut will give a boost to the labor market while not spiking inflation.
Tesla Stock Moves Higher
Tesla stock has been on a strong run lately, up 33% in the last month and up over 70% the last six months. For a brief moment, Larry Ellison, co-founder of Oracle, jumped ahead of Elon to become the richest person in the world. After the recent run higher, Elon’s net worth is now $480 billion compared to Ellison’s at $370 billion. Musk also disclosed a $1 billion purchase of Tesla stock, a sign investors took as a positive for the company moving forward. (CNBC)
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Quiz
How much has the price of oil fluctuated this year? (Scroll Down for Answer)
- 10%
- 3%
- -4%
- -13%
Answer:
4. -13%, the price of oil has moved lower throughout the year and is one of the main reasons inflation has remained low when expectations were that tariffs would cause a spike.
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