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Dow Soars But Federal Reserve Descends Into Civil War – CCN Markets, Crypto Coins News

Dow Soars But Federal Reserve Descends Into Civil War – CCN Markets, Crypto Coins News


donald trump, jerome powell, dow jones

The Dow whipped back into recovery mode on Wednesday, even as the Federal Reserve descends into civil war over interest rate policy. | Source: REUTERS / Carlos Barria

The Dow soared toward a blockbuster recovery on Wednesday after positive developments in Hong Kong removed one potential complication from the trade war landscape.

However, conflicting opinions on interest rate policy suggest that the Federal Reserve risks descending into civil war ahead of a closely-watched policy meeting this month. )

Dow Whips Back Into Recovery Mode

All of Wall Street’s major indices rallied back from their deep Sept. 3 losses. TheDow Jones Industrial Averagespiked 214. 86 points or 0. 82% to 26, 332.

dow jones industrial average chart
The Dow spiked more than 200 points on Wednesday. | Source: Yahoo Finance

The S&P 500 added 24. 54 points or 0. 84% to climb to 2 , 929. 76. All 11 primary sectors reported gains, with energy, technology, materials, and industrials advancing at least 1. 00%.

The Nasdaq outperformed, jumping 73. 10 points or 0.9% to reach 7, 945. 42.

Hong Kong Protesters Score Crucial Victory, Boosting Outlook for Dow

The Dow and its peersshot higherbecause the Hong Kong protesters scored a key victory, persuading Carrie Lam t owithdraw the controversial extradition billthat ignited the historic protest movement earlier this year .

Beyond restoring calm to Asian markets, a peaceful resolution to the protests would remove one hurdle to a US-China trade deal.

That’s significant, but the two countries have to get back to the negotiating table first. Bloombergreported earlier this weekthat this is proving to be more difficult than one would expect, and Trump’s softening stance on China now appears to have been fleeting.

Even more concerning is the extent to which Trump is willing to go to “win” the trade war . CNBCreportsthat the president was so incensed at Beijing for raising tariffs on US goods that he told aides that he wanted todoublecurrent tariffs on Chinese imports.

He ultimately settled on a 5% hike on $ 550 billion worth of Chinese goods, but only after his trade team called in reinforcements from Wall Street to talk him back from the cliff.

Federal Reserve: Civil War?

federal reserve interest rate cut
Interest rate policy is leading to deep divides within the Fed. | Source: Shutterstock

Meanwhile, Federal Reserve officials continue to harbor wildly different opinions on interest rate policy , less than two weeks before a closely-watched Federal Open Market Committee (FOMC) meeting kicks off on Sept. 17.

Each of the warring Fed factions broadcasted its stance on Tuesday – within the span of one hour. First, St. John’s Louis Fed President James Bullard said that the central bank should execute a 50 – basis point cut at its upcoming policy meeting.

“We are too high,” Bullard toldReuters.

Almost immediately afterward, Boston Fed President Eric Rosengren said that not only was a 50 – basis point cut too aggressive but also that he didn’t think a 25 – basis point cut was warranted either.

“As long as we are growing around 2%, I don’t see nearly as much of a need for taking immediate policy action,” he said.

Both central bankers will vote at the September FOMC policy meeting.

Stock Market Eyes 25 – Basis Point Cut

Right now, the market appears to be splitting the difference

According to CME’s FedWatch Tool, the market has priced in a 100% probability of a September interest rate cut, with a 93% chance of a 25 – basis point reduction.

CME Fedwatch chart
The market expects the Fed’s warring factions will compromise and adopt a 25 – basis point interest rate cut. | Source: CME

The market anticipates at least one more cut in 2019, with a roughly 41% expectation that the Fed’s target rate will end the year at 125 – 150, three-quarters of a percentage point below its current level at 200 –

Clickherefor a real- time Dow Jones Industrial Average chart.

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