U.S. stocks welcome interest rate cuts to reach historic highs; what lies ahead for the market? This week, Federal Reserve officials make significant statements to set the tone

According to Zhitong Finance APP, boosted by the Federal Reserve's interest rate cut, the U.S. stock market closed at a historic high last week. In the coming week, speeches by Federal Reserve officials will become the focus of the market, with newly appointed Federal Reserve Governor Stephen Milan and Federal Reserve Chairman Jerome Powell speaking on Monday and Tuesday, respectively, while other FOMC voting members will also speak intensively.

The U.S. inflation data to be released on Friday is also highly anticipated. The market expects the core PCE price index, a favored inflation indicator by the Federal Reserve, to slow to a month-on-month growth rate of 0.2% in August, while the year-on-year growth rate remains at 2.9%, above the Federal Reserve's target level.

Investors will also closely monitor the University of Michigan Consumer Sentiment Index to be released on Friday, as well as mortgage rates. Freddie Mac stated that mortgage rates are nearing their lowest level in a year.

In terms of important earnings reports, investors will focus on Micron Technology (MU.US) for its AI demand and latest revenue guidance, while Costco (COST.US) earnings will be one of the important indicators of consumer spending conditions.

Companies such as Firefly Aerospace (FLY.US), AutoZone (AZO.US), Cintas (CTAS.US), and Accenture (ACN.US) will also release earnings reports.

Federal Reserve Rate Cut Sparks Stock Market Frenzy

Investors are almost certain that the Federal Reserve would cut interest rates last week. In any case, they celebrated this move.

Last Thursday, the S&P 500 Index, Nasdaq Index, Dow Jones Index, and Russell 2000 Index all closed at historic highs for the first time since 2021. Last Friday, except for the small-cap Russell 2000 Index, the other three major indices set new highs again.

Data from Bank of America shows that due to investors not only being excited about the Federal Reserve's rate cut last week but also looking forward to the future policy direction of the Federal Reserve, the stock market experienced the largest single-week inflow of funds since last December.

Bank of America stated that the funds flowing into the U.S. stock market that week reached $57.7 billion, while investors withdrew nearly $5 billion from cash, marking the first single-week outflow since July. Some investors and commentators may talk about concerns over an overheated stock market, but actual actions indicate otherwise.

Additionally, trade risks have also decreased. With the easing of U.S.-China relations, the deadline for tariffs on China has been extended by 90 days to November 10.

Back in Washington, D.C., the U.S. government may shut down later this month, but investors seem unconcerned about the funding issues of the U.S. government.

Last week, Senate Democrats and Republicans blocked each other's proposals to extend government funding until the end of this month. These proposals were originally aimed at giving the U.S. Congress more time to formulate a spending bill.

Clouds Over the International Oil Market

This year, global markets have performed strongly.

U.S. and global stock markets are rising. Gold prices have reached new highs. Bitcoin prices are also soaring.

However, the situation in the energy market is less optimistic.

Global benchmark Brent crude oil and WTI crude oil prices both fell by more than 1% last Friday. Both have declined by over 10% since the beginning of the year Under unchanged conditions, lower borrowing costs and a more relaxed financial environment may stimulate an increase in oil demand, thereby pushing up oil prices.

However, preliminary signs indicate that the market is unlikely to follow this pattern this year.

Given that Saudi Arabia is working to expand its global market share, OPEC+ agreed to increase production in October, a move that surprised the energy market. The increase in production has also raised concerns about the ongoing price pressure facing the oil market. Despite forecasts that supply is continuing to exceed demand, OPEC+ has been increasing production since April.

This is also partly related to the Federal Reserve. Oil is priced in U.S. dollars globally, and the Fed's interest rate cuts have led to a depreciation of the dollar against a basket of foreign currencies. A weaker dollar typically drives up oil prices, offsetting the impact of OPEC+'s production increase. However, this has not been the case this year.

As the oil market faces pressure, the AI arms race is driving an increasing demand for electricity in data centers, putting greater strain on the U.S. power grid and leading to rising electricity costs across the country.

One possible solution is to develop nuclear energy. Stocks related to this theme have also seen an increase, and Bank of America recently predicted that investment opportunities in this field could reach up to $10 trillion over the next few decades