Unraveling U.S. rate cut bets spur investor portfolio shifts

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Inflation News

Rate,Fed,Income

The fading prospect of reductions presents a dilemma to market participants

Fears of rebounding inflation are forcing investors to prepare for a scenario few expected to confront in 2024: a year without U.S. interest rate cuts.

Though the S&P 500 stands near record highs, some equity investors are loading up on insurance in the options market or pouring money into popular inflation hedges such as energy stocks, wary that a key bull market support may be fading. The index fell nearly 1% on Wednesday. The S&P 500 has added some $4.7 trillion in market value since then and climbed to record highs as investors bet on a so-called soft landing scenario, in which the Fed was able to tame inflation without hurting economic growth.

He has also been increasing positions in energy stocks, which have soared along with oil prices and are a popular inflation hedge. The S&P 500 energy sector is up 17% this year, dwarfing the 8.2% rise of the S&P 500.

Rate Fed Income Market Week Bond Investors Tim Murray Scott Wren T. Rowe Price

 

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