Market Volatility Eases as Rate Cut Expectations Rise on Sept. 18

Market volatility has significantly decreased as expectations for interest rate cuts have risen, particularly following the release of August's inflation data. This data has created a favorable environment for the Federal Reserve to consider a rate cut, which is anticipated to occur on September 18. The market is currently leaning towards a conservative cut of 25 basis points, although discussions about a more substantial 50 basis point cut have emerged. In response to these developments, risk assets have seen a notable rebound. The S&P 500 index, tracked by the SPDR S&P 500 ETF Trust, has recovered from previous losses, achieving five consecutive days of gains. Similarly, the Nasdaq 100 experienced its best week since October 2023, reflecting a broader positive sentiment in the market. Additionally, the decline in Treasury yields and the weakening of the dollar have contributed to gold prices reaching all-time highs. Gold mining stocks, represented by the VanEck Gold Miners ETF, also surged, marking their best one-day performance in six months. This trend indicates a growing investor confidence in precious metals amid economic uncertainty. The week also featured a significant political event, with Vice President Kamala Harris outperforming former President Donald Trump in their first televised debate. This performance has further solidified her lead in polls, which may influence future policy directions, particularly in clean energy, as solar stocks have also seen substantial gains. Overall, the combination of economic and political factors is shaping a dynamic market landscape.