While the stock market has enjoyed an impressive run of late, the party could end when the next inflation result comes out in early August.
has gained 13% since hitting its lowest close of the year in mid June, mounting a broad rally that features more than just a handful of stocks. The technology-heavy
is up 16% from its mid June low, and the
Russell 2000 index of stocks with smaller market capitalizations has risen 14%.
The main force behind that has been investors’ view that the Federal Reserve will begin to slow down the sharp increases in interest rates it has been rolling out as it seeks to lower the rate of inflation by curbing economic demand. While the Fed will likely raise its target for the benchmark lending rate at its next few policy-setting meetings, the probability that it lifts the rate to above 3.5% by February has gone down to 17% from a 44% chance a month ago, according to CME Group data.
The bank now aims to keep the benchmark, the fed-funds rate, at 2.25%-2.5%, up from near zero at the start of the year.
Contributing to that more optimistic view about rates are signs in two key places that the rate of inflation has already peaked. Commodity prices are now way down, with West Texas Intermediate crude off about 14% since the start of June, and copper down about 16%. Not only is oil part of the…
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