S&P 500 closes at new high, driven by “Fed put”

Markets mostly rose on Friday.

The S&P 500 rose 0.5 percent to close above 3,000 for the first time ever. The Nikkei 225 rose 0.2 percent and the STOXX Europe 600 rose marginally.

Rate cuts continued to be a focus of attention on Friday, with Chicago Federal Reserve president Charles Evans saying that “a couple of rate cuts” is needed “in order to get the inflation outlook up”.

Patti Domm at CNBC noted that the rate-cut talks have encouraged the view that there is a “Fed put” on the stock market.

The Fed “is the factor,” she quoted Michael Farr of Farr, Miller & Washington as saying.

“I’ve now come to the conclusion the Fed is going to to cut rates not because of the weakness in the U.S. economy but because they want to make the coordinated effort to forestall a global recession,” said Sam Stovall, chief investment strategist at CFRA.

Indeed, Domm noted that the “Fed’s anticipated rate cut is unusual in that it comes at a time of very low unemployment and an economy that is growing at trend of about 2%” and “with core CPI rising at a 2.1% pace year over year, one of the highest readings during the recovery”.