Wall Street collapses this Wednesday after moderate falls on Tuesday and after knowing the rate decision of the Federal Reserve (Fed). To highlight, the Dow Jones has chained 9 days in a row in negativehis worst streak in 46 yearsalthough he has lost less than a 4% from historical highs. The US central bank has lowered interest rates by 25 basis pointsup to the fork between the 4.25%-4.50%in line with what the market anticipated and in what represents the third cut in its current flexibility cycle. The organization has also advanced how only foresees two rate decreases in 2025. In its statement, the Fed explained that it has opted for this movement in its search for maximum employment and return inflation to the 2% target. In addition, he has emphasized that recent indicators suggest that economic activity has continued to expand at a solid pace. «Since the beginning of the year, labor market conditions have generally relaxed and the unemployment rate has increased, but remains low. Inflation has progressed toward the Committee's 2% target, but remains somewhat high«. The central bank has also updated its economic projections and has PCE inflation revised upwards expected for this year, up to 2.4%, one tenth above the September forecast. For next year it has increased it to 2.5%, from the previous 2.1%. With regards to the underlying variablehas also been revised upwards, and now expects it to be 2.5% in 2025 and 2.2% in 2026. Regarding the economy, it considers that the GDP will grow by 2.1%, one tenth more than its previous estimate, while placing the unemployment rate at 4.3%, compared to the 4.4% expected in September. For his part, Jerome Powell, president of the Fed, has pointed out that «the slower pace of descents for next year reflects both the higher inflation readings that we have had this year as the forecast that inflation will be higher. We still see ourselves in a position to cut back.» Likewise, he made reference to the fact that «the labor market It is weaker than before the pandemic, we don't need to cool it more to lower inflation» Still, Powell has insisted that «the real cuts we will make next year are not due to anything we wrote today. Let's react to the data«We've done a lot to support economic activity by cutting 100 basis points, and I support that decision and I think it was the right one. We moved very fast to get here, From now on we will move more slowly«, he declared.
THE OTHER GREAT REFERENCE: THE PCE
The other point of interest for investors is in the macro agendawhich also has notable references such as Third quarter GDP or the weekly unemployment data (Thursday). However, the main course will arrive on Friday, with the November PCE consumption deflatorthe Fed's preferred measure of inflation, and for which a general rate rebound up to 2.5% from 2.3% the previous month, and that the underlying rises slightly from 2.8% to 2.9%.
AGREEMENT TO FINANCE THE GOVERNMENT
At the political level, the US Congress has closed a agreement to extend government financing until next March 14 and thus avoid its closure. The bill, which must be ratified in the coming days, includes 100.4 billion dollars in emergency aid aimed at mitigating the Damage caused by hurricanes Helene and Miltonas well as $10 billion in economic support and disaster relief for affected farmers. This pact will allow the new Congresswith a Republican majority in both chambers, faces the budget negotiations in the first months of 2025.
COMPANIES AND OTHER MARKETS
In today's business, Nvidia shares rebound 5% this Wednesday after the falls they suffered in the last sessions. The chip manufacturer celebrates the decision of the analysts on the stock market Piper Sandler to reiterate his recommendation to 'overweight' the value, which he sees as the best option for 2025. In other markets, oil West Texas rises 0.83% ($70.70) and the Brent advances 0.60% ($73.64). For his part, the euro depreciates 0.01% ($1.0491), and the ounce of gold loses 0.16% ($2,658). Furthermore, the 10-year American bond yield is revalued to 4.397% and the bitcoin loses 1.83% ($104,676).