Wall Street rallies as Fed rate cut hopes rise

On Friday, Wall Street's main indexes experienced significant gains as investors reassessed the likelihood of a larger interest rate cut by the Federal Reserve in the upcoming week. The Dow Jones Industrial Average surged over 400 points, nearing its all-time high, while the S&P 500 and Nasdaq also recorded gains. The market's optimism was fueled by a notable increase in traders' expectations for a 50-basis point rate cut, which rose to 47% from 14% the previous day, according to CME's FedWatch Tool. Former New York Fed President Bill Dudley highlighted the strong case for a 50-bps cut, and media reports described the Fed's decision as a 'close call,' adding to market uncertainty. Analysts from Deutsche Bank noted that recent articles in major financial publications prompted a reevaluation of market expectations regarding the Fed's monetary policy. Despite the positive market sentiment, concerns about a potential recession lingered, with market participants eager for the Federal Open Market Committee (FOMC) to act swiftly. The meeting next week is viewed as a critical event, regardless of whether the Fed opts for a 25 or 50 basis point cut. In individual stock movements, Boeing's shares fell 2.6% following a strike by West Coast factory workers, while Adobe's stock dropped 9% after it projected lower-than-expected fourth-quarter earnings. Conversely, Oracle's shares rose 2.7% after it raised its revenue outlook, and Uber gained 5.7% as it announced plans to expand autonomous ride-hailing services in Austin and Atlanta.