Stocks Rebound as Wall Street Reassesses Rate-Cut Expectations
US stocks recovered Friday from their worst single-day decline in over a month, staging a partial rebound as investors reassessed the Federal Reserve’s path on rate cuts following the end of the six-week federal government shutdown.
The Dow slipped 0.3%, while the S&P 500 rose 0.3% and the Nasdaq gained 0.5%, climbing back from earlier deep losses. The bounce keeps all three major benchmarks on track for weekly gains.
Tech, which fueled Thursday’s sell-off, regained its footing:
- Tesla briefly broke below $400 before turning green.
- Nvidia reversed early losses.
- Bitcoin extended its slide below $96,000, now more than 20% off its October high.
The moves reflect a market still struggling to find equilibrium after the shutdown temporarily froze the flow of official economic data, depriving investors and policymakers of crucial visibility into inflation, labor conditions, and overall economic momentum.
Fed Uncertainty Clouds Market Outlook
Rate-cut expectations have cooled rapidly. Markets that once priced a 95% chance of a December cut now see less than a 50% probability, as Federal Reserve officials adopt a more hawkish tone.
Minneapolis Fed President Neel Kashkari became the latest to caution against easing too quickly, pointing to persistent inflation concerns and continued economic resilience.
The data blackout from the shutdown complicates the Fed’s next move — with questions lingering about:
- Which inflation and labor-market reports will be published
- Whether missing October data can be reconstructed
- How policymakers will assess conditions without a full dataset
Trade Developments Add New Variables
In an effort to ease price pressures, the administration is preparing significant tariff reductions to lower food costs, including on imports such as coffee, bananas, and agricultural products from Latin America. Additional trade deals with countries like Argentina and Brazil aim to stabilize commodity prices ahead of key inflation readings.
WSA Take
Markets managed a steady rebound, but the path ahead is murky. With the shutdown leaving major data gaps and the Fed signaling caution, investors are flying with less visibility than usual. Expect more volatility as rate expectations recalibrate.
Read our recent coverage on the new Bitcoin Dropping Below $95K.
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