Economists warn markets are 'too optimistic' about Fed pivot prospects

Follows a dramatic two-day rally

Valeria Martinez
clock • 5 min read

Markets rallied earlier this week on hopes of a Federal Reserve pivot due to early signs of a cooling US economy, but industry experts say it is too soon to be confident the central bank will change its course.

Although Wall Street and European markets had dipped slightly by Wednesday (5 October), Tuesday's moves took the S&P's advance over two days to 5.7% — its strongest rally since April 2020, according to data by Morningstar Direct.  The rally followed the release of cooler US labour market data, which helped ease some concerns about the pace of the Federal Reserve's interest rate rises. Talk of a possible pivot from the Fed also intensified after Australia's central bank delivered a smaller-than-expected 25bp interest rate hike.  On Monday (3 October), Morgan Stanley's CIO Mike Wilson s...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Markets

US inflation falls to 3.3% in May

US inflation falls to 3.3% in May

Hopes of Fed winter rate cut

clock 12 June 2024 • 1 min read
Market Movers Blog: Apple teams up with OpenAI to launch AI-backed 'Apple Intelligence'

Market Movers Blog: Apple teams up with OpenAI to launch AI-backed 'Apple Intelligence'

Latest news and analysis

Investment Week
clock 11 June 2024 • 1 min read
Ashtead weighs switch to US listing in latest blow to London market

Ashtead weighs switch to US listing in latest blow to London market

Current FTSE 100 member

clock 10 June 2024 • 2 min read
Trustpilot