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Wall Street Pauses as Fed Meeting Looms: Futures Hold Steady

U.S. stock futures were little changed on Tuesday as investors awaited the start of the Federal Reserve’s final policy meeting of the year. The Dow Jones Industrial Average, S&P 500, and Nasdaq futures all hovered near flat, reflecting a cautious mood across Wall Street. The Fed is widely expected to keep interest rates unchanged, but traders are focused on Chair Jerome Powell’s comments and the central bank’s updated economic projections. Markets are looking for clues on when rate cuts might begin in 2024, with inflation cooling but still above the Fed’s long-term target. Recent gains in equities have been fueled by optimism that the Fed’s tightening cycle is over, yet uncertainty remains about how quickly monetary policy will shift toward easing. Until then, investors appear content to hold their positions, waiting for clearer signals from the Fed before making bold moves.
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S&P 500 Breaks 5,000 Barrier as US Stocks Rally

US stocks continued their upward momentum on Friday, as the S&P 500 index closed above the 5,000 mark for the first time in history. The benchmark index gained 0.57% to end at 5,026.61, boosted by strong earnings from tech giants such as Amazon and Meta. The Nasdaq 100 also hit a new record high, rising 1.25% to 15,990.66.

The rally came amid signs of a cooling inflationary pressure and a robust economic recovery in the US. The latest data showed that the consumer price index (CPI) rose 3.9% year-over-year in January, down from 4.1% in December and below market expectations. The core CPI, which excludes food and energy, also eased to 3.6% from 3.8% over the same period.

The Fed has been closely monitoring the inflation situation, as it prepares to start tapering its massive bond-buying program and eventually raise interest rates. The central bank has signaled that it could hike rates as soon as March, depending on the economic data and the pandemic situation. However, some Fed officials have also expressed caution about tightening too quickly, given the uncertainty and risks posed by the Omicron variant and the supply chain disruptions.

Investors will be looking for more clues on the Fed’s policy outlook this week, as several Fed speakers are scheduled to appear, including Chair Jerome Powell, who will deliver his semi-annual testimony to Congress on Tuesday and Wednesday. The market will also pay attention to the retail sales and industrial production data for January, as well as the minutes of the Fed’s latest meeting.

Meanwhile, the earnings season is still in full swing, with more than 300 companies set to report their quarterly results this week. Some of the notable names include John Deere, Coca-Cola, Airbnb, Kraft Heinz, Walmart, and Nvidia. So far, about 80% of the S&P 500 companies that have reported have beaten analysts’ estimates, according to FactSet.

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