Dow surges more than 600 points as the stock market gears up for rate cuts

Wall Street is experiencing a noticeable shift in sentiment as investors adjust their expectations for interest rate cuts. Despite stubborn inflation, strong corporate earnings have propelled stocks to record highs in 2024. Cooling inflation data has led to speculation that the Federal Reserve will cut interest rates in September. This has caused investors to look beyond the dominant tech stocks for potential gains. The recent slowdown in inflation and resilient economic data have raised hopes that the central bank can control prices without triggering a recession. Wall Street will closely watch the Fed’s upcoming policy meeting for further indications. Meanwhile, small-cap stocks have benefitted from the prospect of lower rates, outperforming their larger counterparts. On the other hand, tech stocks have faced recent declines due to underwhelming earnings results, making some investors concerned about the market’s reliance on these companies. The AI arms race among tech firms continues, with substantial investments in artificial intelligence. However, the ability to monetize this technology and generate revenue remains uncertain.