Wall Street Rides Rate-Cut Hopes Amid Robust Economic Signals

Investors anticipate a rate cut by the Federal Reserve in December as economic data and dovish statements bolster market optimism. Stock indexes have risen amid expectations, and focus now shifts to an upcoming economic report, the Beige Book. Holiday shopping may further influence market trajectories.

Wall Street's major stock indexes were set for a positive opening on Wednesday, driven by new economic data that instilled confidence in a potential Federal Reserve interest rate cut come December. A Labor Department report revealed fewer new unemployment claims than expected, with 216,000 filings versus the projected 225,000.

Contributing to the optimistic market outlook was a delayed report indicating a rise in new orders for capital goods in September, exceeding economist expectations of 0.3% with an actual increase of 0.5%. "The economy's current state allows flexibility for the Fed to cut rates," explained Kim Forrest, chief investment officer at Bokeh Capital Partners.

With consumer demand showing signs of softening, markets are now pricing in an 84.9% likelihood of a 25 basis-point Fed rate cut next month, a prediction supported by the CME Group's FedWatch Tool. Investors' attention will next turn to the Federal Reserve's Beige Book, expected to provide further insight into the economic climate.

(With inputs from agencies.)