The S&P 500 briefly touched new all-time highs yesterday but remains in a tight trading range since the Fed reduced interest rates last week. Equity participants are trying to interpret whether the 50-basis point cut was authorized because the Fed knows something is uneven with economy, or perhaps the policy rate was simply moved to realign rates relative to disinflation. Inflation has certainly subsided, yet the labor market is not as strong as it recently was. Equity traders will next focus on any new clues Fed policy makers give today as well as core PCE data tomorrow.  An in-line or lower than expected inflation print could increase the likelihood of another 50-basis point cut in November and serve as a catalyst for higher highs across the equity complex.

In unification with the FOMC, the Chinese central bank announced a stimulus program by lowering the benchmark rate and the reserve requirement ratio. This meaningful action led a rise across Chinese equities and is perhaps one reason why semiconductor names such as Nvidia (NVDA) and Micron (MU) have also caught a recent bid along with industrial metals like copper and aluminum. China lowering rates represents a parallel monetary policy match with the Fed. This effort is made to stimulate domestic investment, reduce financial capital flight, and provide a stable footing for the exchange rate relative to the dollar.

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