Morning Bid: Flirting with records as Fed rates finally fade

Fed's pause to cool inflation delivers record profits

After a string of aggressive rate hikes, the Federal Reserve indicated it would take a pause in its fight against inflation. This news has sent ripples through the markets, with investors betting on a soft landing for the economy and a potential surge in risk assets.

The latest data shows that the Fed's efforts to curb inflation are bearing fruit. Consumer prices have eased from their peak in June, and the labor market remains resilient. This has led some analysts to believe that the worst may be over for the US economy.

Tech stocks lead the charge

In the wake of the Fed's announcement, tech stocks have been among the biggest beneficiaries. The Nasdaq Composite Index has rallied by more than 10% since the start of the month, led by gains in companies like Apple, Amazon, and Microsoft.

Investors are betting that the Fed's pause will give tech companies more room to breathe. With inflation easing, consumers may be more likely to spend on discretionary items, such as new smartphones and laptops.

Cautious optimism ahead of earnings season

While the markets are flirting with records, there is still a sense of cautious optimism ahead of earnings season. Many companies are expected to report weaker profits as the economy slows down.

Analysts will be closely watching the guidance from corporate leaders for signs of how they see the future. If companies are upbeat about their prospects, it could provide further support to the markets.

Key takeaways

• The Fed's pause in rate hikes has boosted market sentiment.
• Tech stocks have been among the biggest beneficiaries of the Fed's announcement.
• Investors are cautiously optimistic ahead of earnings season.