It's no surprise that tech shares are leading the charge, with Nasdaq futures marked up by 0.7% currently. Wall Street saw a mixed showing yesterday as tech shares fell while the Dow closed higher by 0.6%. But if you look at the intraday moves, things could've gotten a whole lot worse for equities and risk sentiment.
When Fed chair Powell did not offer too much of a dovish take, there was some heavy selling. However, dip buyers quickly stepped in as they stuck to their guns in expecting the Fed to continue to deliver rate cuts in October and December.
The dot plots remain a tough one to decipher. That besides the one outlier, in which we know is Miran is wanting 50 bps rate cuts at every meeting by year-end. But at the balance, it shows 10 policymakers expecting two or more rate cuts with 9 policymakers seeing just the one more.
The divide is going to make it tough to pick a side for now, with Fed chair Powell playing it safe in calling this a "risk management" cut while reaffirming a more data-dependent approach.
But if there's one lesson to be heeded since the post-Covid era, it is that equities will always find a way to spin the narrative to their liking. It feels now that the onus is on US data to prove market players wrong, rather than having to account for the risk of stronger inflation and labour market data.
The mantra these days seems to be buy first, worry later. And this time might not be so different.
