Financial district records another profitable week on stock markets
Federal Reserve Prepares for Interest Rate Cut Amid Slowing Economy
Next week, the Federal Reserve will provide valuable insights into inflation and the economy, with updates on consumer and wholesale inflation levels, as well as a report on retail sales.
The Fed has maintained the federal funds target rate between 4.25% and 4.5% since July 30, 2025. However, Fed policymakers, including Governor Michelle Bowman, have signaled a shift towards easing monetary policy, projecting three quarter-point interest rate cuts by the end of 2025.
This potential easing is in response to evolving economic conditions, as the labor market shows signs of cooling, with unemployment at 4.2% and solid wage growth. Inflation has declined but remains above the Fed's 2% target, at about 2.6% over the past year.
Recent weaker job reports and inflation data suggest that the Fed may soon lower rates to address slowing economic momentum and mitigate risks of a more pronounced slowdown. Markets also anticipate a rate cut, with futures pricing in nearly a 96% probability of a quarter-point reduction at the next FOMC meeting in mid-September 2025.
The current high-interest rate environment continues to impact borrowing costs, such as mortgage rates that have remained near 7%, a level significantly higher than pre-pandemic lows.
Meanwhile, Wall Street is betting on a rate cut, with the market predicting a quarter-point reduction at the Fed's next meeting in September. The S&P 500 rose 0.8% and finished just shy of its record set last week, while the Dow Jones Industrial Average climbed 0.5%. Nvidia rose 1.1% and Apple gained 4.2%.
In other news, Expedia Group rose 4.1% due to encouraging financial results, and Gilead Sciences jumped 8.3% due to financial results that exceeded analysts' forecasts. Microsoft is refreshing its approach to hybrid work, which may signal a tighter return to office.
On the other hand, Paramount Skydance slid 10.5% after an $8 billion merger, and shares in Warner Bros. Discovery sank 8%. Asian markets closed mostly lower, except in Tokyo, where the Nikkei rose 1.9%. European markets were mixed. Bank of America gained 2.4% and Mastercard rose 2.3%, helping drive the market higher.
In Washington state, landlords have been fined for the first time under the new rent cap law. Lastly, a Seattle teen who created a card game at the age of 7 has now become a millionaire.
- The Federal Reserve's potential easing of monetary policy, signified by a series of interest rate cuts, could significantly influence business and finance, particularly in the realm of investing and borrowing costs, such as mortgage rates.
- In the tech industry, Microsoft is adapting its approach to hybrid work, which may indicate a closer alignment with the office in the near future.
- Despite the economic slowdown, some businesses such as Expedia Group and Gilead Sciences have reported encouraging financial results, leading to increased share prices.
- Josephine, a Seattle teen who created a successful card game at the age of 7, has now become a millionaire, demonstrating the potential for success in the business sector, even at a young age.
- In Washington state, the implementation of a new rent cap law has resulted in fines for landlords, signifying a shift in government policy aimed at protecting tenants.
