Traders were already convinced that the Fed will deliver its first cut to interest rates of the year at its next meeting, but they need inflation data in the interim to come up mild enough not to derail those expectations. That’s because cuts to interest rates can push inflation higher, along with giving the economy a kickstart, and hot inflation could tie the Fed’s hands.
“The broader narrative is increasingly anchored on expectations that the Fed will deliver a rate cut at next week’s meeting,” said Ahmad Assiri, research strategist at Pepperstone.
On Wall Street, tech stocks helped lead the way after Oracle said AI-related demand is set to send its revenue surging. CEO Safra Catz said Oracle signed four multi-billion dollar contracts during its latest quarter, and it expects cloud infrastructure revenue to jump 77% to $18 billion this fiscal year. After that, it expects such revenue to soar to $144 billion in just four years.
“AI Changes Everything,” Oracle Chairman Larry Ellison said in a statement.
Oracle stock leaped 34.4% and was potentially heading for its best day since 1992, even though it also reported results for the latest quarter that came up just shy of analysts’ expectations.
In stock markets abroad, indexes were mixed in Europe after rising across much of Asia. South Korea’s Kospi rose 1.7%, and Hong Kong Hang Sang climbed 1% for two of the bigger moves.
In the bond market, the yield on the 10-year Treasury eased to 4.03% from 4.08% late Tuesday after the encouraging report on wholesale inflation bolstered expectations for coming cuts to interest rates.
