- Expected volatility rises in coming days amid hedging demand
- Inflation data, Fed outlook seen as key risks for market rally
Investors are facing a pivotal week as a key measure of inflation that hits Tuesday and the Federal Reserve’s interest-rate decision on Wednesday are expected to set the tone for the stock market and economy heading into 2024.
Growing speculation that the Fed is done hiking rates and will start cutting by mid-year is fueling a sharp drop in Treasury yields and rekindling investors’ risk appetite. The S&P 500 Index has added roughly $4 trillion in market value since late October, as traders rush into beaten-down areas of the market like small caps, which typically benefit from falling borrowing costs.
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