As US inflation continues to decline, excitement is surging through the stock market.
The S&P 500 SPX, -0.10% climbed above 4,500 for the first time in more than 15 months during the last week after statistics from the consumer and producer price indexes revealed lower-than-expected inflation in June.
This happened when both sets of data revealed that June’s inflation rate was lower than anticipated.
Because of improved economic projections, many bulls predict that the S&P 500 will reach a new high for the year later this year.
According to data published by Dow Jones, the closing price of the large-cap equities indicator reached a new high of 4,796.56 in January 2022.
Scott Ladner, the chief investment officer for Horizon Investments, belongs to this school of thought.
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US Dollar’s Decline And Its Impact On Riskier Assets
The Federal Reserve’s year-long campaign to raise interest rates in a bid to slow the economy and lower inflation may be nearing its conclusion at this point. According to Ladner, stable or declining borrowing costs fuel the surge even more.
The Federal Reserve is expected to increase its benchmark interest rate at least once more before the year is up, according to market sentiment.
The likelihood that the US central bank will increase its benchmark interest rate by 25 basis points to a range of 5.25% to 5.5% in July is over 95%, according to CME FedWatch, and the potential that it would do so again after July is 23%.
Riskier assets are receiving further encouragement from the US dollar’s declining value. The ICE US Dollar Index DXY, -0.06%, according to data published by Dow Jones, reached 99.96 on Friday at 4pm Eastern time.
Since April 2022, this is the index’s lowest closing value. Ladner noted that the dollar would be under even greater pressure if the Federal Reserve were to soon finish raising its benchmark interest rate but other central banks were not.
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Source: www.marketwatch.com