"Markets do not move solely on raw data, but on expectations about the future, and the latest inflation readings-despite all the methodological caveats surrounding them-have revived a long-anticipated scenario: the approaching end of the monetary tightening cycle and the serious consideration of interest rate cuts in 2026. The decline in headline inflation to 2.7% and core inflation to 2.6%, both below market expectations, carries an important psychological signal"
"Accordingly, I believe the market's positive reaction was not exaggerated, but rather consistent with a long-term investment logic. The simultaneous rise in the S&P 500, Nasdaq, and Dow Jones reflects a gradual return of risk appetite, particularly toward growth stocks that had faced notable pressure over the past two months. Historically, this type of behaviour tends to emerge when markets begin to anticipate a shift in monetary policy, even before it is explicitly announced by the central bank."
U.S. equity indices rebounded after four losing sessions, trading near 6,774, reflecting a shift in investor sentiment about economic and monetary-policy direction. Recent inflation readings showed headline inflation at 2.7% and core inflation at 2.6%, both below expectations, signaling that inflationary pressures may be easing. The data, despite methodological caveats and incomplete reporting, lowered the perceived probability of further Fed tightening and increased consideration of rate cuts in 2026. The market response included rising S&P 500, Nasdaq, and Dow Jones levels and renewed risk appetite, especially toward growth stocks previously under pressure.
Read at London Business News | Londonlovesbusiness.com
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