U.S. Stocks Welcome Dawn: Economic Soft Landing Expectations Heat Up, Boosting Market Confidence

On a crisp autumn Wednesday, Wall Street was greeted by a long-awaited warm sun. Both the S&P 500 and the Dow Jones Industrial Average reached new closing highs, injecting a strong stimulant into the market. This uptrend is particularly significant as it coincides with the release of the Federal Reserve's meeting minutes, the upcoming release of September's inflation data, and the arrival of the earnings season. It not only reflects investors' optimistic expectations for the economic outlook but also suggests that the U.S. economy may be heading towards a "soft landing" or even a "no landing" direction.

The story begins with the latest developments from the Federal Reserve. The meeting minutes revealed that the "vast majority" of officials supported a substantial interest rate cut in September—by half a percentage point. Despite this, officials also generally agreed that this does not mean the Federal Reserve will continue to cut interest rates at the same pace in the future. This news is undoubtedly positive for the market, as it dispels investors' concerns about the Federal Reserve being overly aggressive in cutting interest rates. As Lindsey Bell, Chief Strategist at 248 Ventures, said, "The minutes confirmed what we have been thinking all along, which was a relief for investors."

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Even more exciting is the market's growing confidence that the Federal Reserve is winning the battle against inflation. Bell stated, "The minutes also further confirmed that the Federal Reserve believes they have won the battle against inflation." This also implies that the upcoming Consumer Price Index (CPI) inflation report may not bring too many surprises. If inflation data can remain stable, it will further consolidate the market's expectations for a soft economic landing.

The market is not without challenges. The U.S. Department of Justice indicated that it might ask a judge to force Google to divest some of its businesses to weaken its search monopoly. Affected by this news, Alphabet, Google's parent company, closed down 1.5%. Even facing such headwinds, the market as a whole still maintained an upward momentum. This shows that investors' confidence is not built on castles in the air but is based on an optimistic judgment of the economic fundamentals.

Interpreting Market Positives from Multiple Dimensions

From an economic perspective, the stock market's rise reflects investors' confidence in the resilience of the U.S. economy. Despite facing multiple challenges such as geopolitical tensions and inflationary pressures, the U.S. economy still demonstrates strong vitality. The unexpectedly strong September employment report further strengthened the market's expectations for a soft economic landing. This means that the U.S. economy may be able to avoid falling into a recession and may even achieve sustained growth.

From a financial market perspective, the stock market's rise also reflects investors' optimistic expectations for future earnings. The earnings season is about to begin, and some of the largest U.S. banks will release their earnings reports on Friday. If corporate profits can maintain robust growth, it will further boost market confidence and push the stock market higher.

From a social perspective, the stock market's rise also sends a positive signal. It indicates that people are hopeful about the future and willing to invest in it. This is of great significance for boosting consumer confidence and promoting economic growth.

Data Supports Market Optimism

Data also supports the market's optimistic sentiment. For example, the latest consumer confidence index has risen, indicating that consumers are more optimistic about the future and willing to spend. Additionally, the latest manufacturing and service industry data show that the economy is still growing, albeit at a slower pace. These data points suggest that the economy is not in a recession but is experiencing a slowdown, which is consistent with the market's expectations for a soft landing.The Dow Jones Industrial Average rose by 1.03%, closing at 42,512.00 points; the S&P 500 Index increased by 0.71%, closing at 5,792.04 points; the NASDAQ Composite Index gained 0.60%, closing at 18,291.62 points. The S&P 500 Index set a new closing high for the first time in October, marking the 44th new closing high for the year 2024. The last time the Dow Jones Index reached a new closing high was on October 4th. These figures all indicate that the market is in an upward trend.

Out of the 11 industry sectors in the S&P 500 Index, 9 of them experienced gains. This suggests that the market's rise is not confined to just a few sectors but is showing a broad-based uptrend.