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Bank of America says these 3 higher-risk stocks are well-positioned to take off as rate cuts spur an economic recovery in 2025

<ul class="summary-list"><li>JB Hunt beat earnings estimates for the first time in two years.</li><li>Shares climbed as much as 8% on signs of improving demand.</li></ul>Trucking company <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/jbht-stock">JB Hunt</a> earned the approval of stock investors on Wednesday after a stronger-than-expected earnings report showed demand is coming back.Shares of the company climbed as much as 8% after both third-quarter revenue and earnings-per-share results surpassed estimates after the closing bell on Tuesday. It's welcome news for a company whose earnings have consistently underwhelmed forecasts over the last two years. The last time JB Hunt exceeded the consensus EPS forecast was the third quarter of 2022.It's a promising signal that the prolonged <a target="_blank" href="https://www.businessinsider.com/accuride-default-freight-recession-outlook-trucks-consumer-demand-sp-global-2024-7">US trucking-industry recession</a> is easing and demand in the sector is returning, albeit gradually. JB Hunt specifically mentioned demand in its biggest business — intermodal service — had improved throughout the third quarter.The firm — considered a freight industry bellwether — has been among many suffering from an extensive <a target="_blank" href="https://www.businessinsider.com/jb-hunt-q1-earnings-miss-stock-price-freight-recession-outlook-2024-4">post-pandemic trucking slowdown</a>. With low demand and oversupplied trucking fleets, this so-called recession has <a target="_blank" href="https://www.businessinsider.com/freight-recession-outlook-trucking-bankruptcies-fedex-ups-consumer-demand-downturn-2024-7">bankrupted thousands of carriers and trucking brokers</a>.These struggles have translated into weak market performance for JB Hunt and other freight carriers. Even with Wednesday's sharp move higher, the company's stock is still down roughly 10% year-to-date, badly trailing a 23% return for the benchmark S&amp;P 500."We continue to navigate a challenging freight environment," JB Hunt CEO Shelley Simpson acknowledged in the firm's earnings conference call on Tuesday, but followed up with a positive take: "As discussed last quarter, we have seen a return to more normal seasonal demand patterns as evidenced across our businesses in the third quarter."Chief operating officer Nicholas Hobbs added: "Our sales pipeline remains strong, and our team has worked hard to backfill most of those truck losses we have experienced this year."He added that 258 trucks were sold in new deals over the quarter and cited a significant pickup in customer locations, boosting the firm's trucking margins.Going beyond JB Hunt, there has been other data suggesting better prospects ahead.DAT Freight &amp; Analytics' trucking volume index rose year-over-year for all three different categories of freight equipment for the 12 months ended in September."We're firmly into a new freight cycle after nearly 22 months of rather extreme expansion and 27 months of contraction," Ken Adamo, DAT chief of analytics, said in a <a target="_blank" href="https://www.businesswire.com/news/home/20241015297952/en/DAT-September-%E2%80%98firmly-into-a-new-truckload-freight-cycle%E2%80%99">release</a> on Wednesday."We expect seasonality to provide some tailwinds over the next few months, and hopefully modest improvements in rates coupled with retail freight volumes and stable fuel prices can get the motor carrier base on more solid footing," he added.

The US freight recession is showing early signs of recovery

The rupee rose 2 paise to 84.40 against the US dollar in early trade on Tuesday amid a recovery in domestic equity markets and a weaker American currency against major Asian rivals. Forex traders said, however, sustained outflow of foreign funds and an upward movement in crude oil prices put pressure on the local unit and capped its sharp gain. At the interbank foreign exchange, the rupee opened at 84.39 and slipped further to 84.40 against the greenback, trading 2 paise higher from its previous close. On Monday, the rupee recovered from its lowest level of 84.46 to settle 4 paise higher at 84.42 against the US dollar. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.09 per cent at 106.10. Brent crude, the global oil benchmark, rose by 0.19 per cent to USD 73.44 per barrel in futures trade. On the domestic equity market front, Sensex was trading 271.42 points, or 0.35 per cent higher, at 77,610.43 points. The Nifty advanced 105.55 points, or 0.45 per cent, to 23,559.35 points. <keyword id="19932515" type="General" weightage="20" keywordseo="Foreign-Institutional-Investors" source="keywords">Foreign Institutional Investors</keyword> (FIIs) were net sellers in the capital markets on Monday, as they offloaded shares worth Rs 1,403.40 crore, according to exchange data. SEE ALSO:<a href="https://www.businessinsider.in/tech/mobile/news/tata-to-buy-a-majority-stake-in-pegatrons-iphone-plant-in-india/articleshow/115414852.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/mobile/news/tata-to-buy-a-majority-stake-in-pegatrons-iphone-plant-in-india/articleshow/115414852.cms" target="_blank">Tata to buy a majority stake in Pegatron's iPhone plant in India</a><a href="https://www.businessinsider.in/stock-market/webstories/ntpc-green-energy-ipo-gmp-risk-factors-and-all-you-need-to-know/slidelist/115403791.cms" target="_blank"></a> <a href="https://www.businessinsider.in/stock-market/webstories/ntpc-green-energy-ipo-gmp-risk-factors-and-all-you-need-to-know/slidelist/115403791.cms" target="_blank">NTPC Green Energy IPO – GMP, risk factors and all you need to know</a><a href="https://www.businessinsider.in/entertainment/news/jiostar-announces-plans-starting-at-15-heres-everything-you-need-to-know/articleshow/115326701.cms" target="_blank"></a> <a href="https://www.businessinsider.in/entertainment/news/jiostar-announces-plans-starting-at-15-heres-everything-you-need-to-know/articleshow/115326701.cms" target="_blank">JioStar announces plans starting at ₹15 – here’s everything you need to know</a>

Rupee rises 2 paise to 84.40 against US dollar in early trade

<keyword id="19991358" type="General" weightage="100" keywordseo="Indian-markets" source="keywords">Indian markets</keyword> are navigating choppy waters as global economic shifts, from rate cuts to evolving political climates, create new pressure points across the financial landscape, according to a recent report by ANI attributed originally to the Union Bank of India. The domestic stock and bond markets showed signs of strain, with <keyword id="19910363" type="General" weightage="20" keywordseo="bond-yields" source="keywords">bond yields</keyword> witnessing slight adjustments. India’s 10-year government bond yield dipped to 6.82%, a decrease from the previous session, reflecting cautious investor sentiment as the markets react to shifting global indicators. Meanwhile, the 5-year bond yield remained steady at 6.76%, a signal of lingering hesitation amid economic unpredictability. In the currency market, the rupee faced a notable decline, ending the day at ₹84.3725 against the US dollar, slipping from its prior close of ₹84.2800. Market analysts point to significant capital outflows as a key factor, with investors moving funds to perceived safer assets overseas. This migration has weighed heavily on the rupee, underlining the currency’s vulnerability in an environment of global economic flux. India’s stock market bore the brunt of this volatility, with key indices falling over 1%, effectively erasing the gains of a previous rally. This abrupt drop reportedly reflects renewed investor anxiety, largely triggered by the recent <keyword id="20189882" type="General" weightage="20" keywordseo="US-presidential-election" source="keywords">US presidential election</keyword> results. Experts suggest that the election has introduced a fresh layer of uncertainty, not only for the US economy but for global markets, impacting everything from policy decisions to investor sentiment. Analysts are also keeping a close eye on upcoming decisions by central banks, which will likely shape the path forward for the Indian equities market. Commodities showed contrasting trends, with Brent crude prices falling on lower demand expectations, as economic indicators point toward cautious spending globally. Gold, on the other hand, experienced a modest rise as investors sought refuge in safe-haven assets, highlighting a shift towards risk aversion among market participants. Globally, major central banks made coordinated efforts to sustain economic growth, with the Bank of England (BoE) announcing a 25 basis-point cut, lowering its benchmark rate to 4.75%. The BoE’s Monetary Policy Committee (MPC) largely backed this move to counter inflation, which has been declining, albeit gradually. Across the Atlantic, the US Federal Reserve mirrored this action with its own 25 basis-point cut, a sign of confidence in the ongoing economic recovery. Both rate cuts, though modest, signal a global trend towards caution as economies work to balance growth with stability. In Asia, the People’s Bank of China (PBoC) maintained its supportive stance. Governor Pan Gongsheng sought to reassure foreign investors by reaffirming the PBoC’s commitment to growth-oriented policies. Pan emphasized enhanced communication and pledged to open China’s financial services sector further, aiming to attract more international participants. Europe, meanwhile, faced mixed economic signals. Germany reported a steep 2.5% drop in industrial production in September, signalling a slowdown in manufacturing, while the Eurozone saw a mild 0.5% rise in retail sales, reflecting cautious consumer optimism in the region. Adding another layer to the global economic landscape, the European Union’s Climate Change Service warned that 2024 could be the hottest year on record, underscoring urgent climate challenges just as the UN COP29 climate summit approaches. The summit, set to take place in Azerbaijan, aims to rally increased funding for climate action, though tempered expectations linger in light of recent US political shifts. On the domestic front, Niti Aayog CEO BVR Subrahmanyam spoke about India’s potential role in pivotal global trade agreements, specifically the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). These partnerships, Subrahmanyam suggested, could bolster India’s Micro, Small, and Medium Enterprises (MSME) sector, which currently accounts for 40% of India’s exports, offering a strategic advantage for Indian trade in an interconnected world. As the Indian markets digest these developments, experts believe continued volatility could be the theme for the coming months. (with ANI inputs)

Indian markets under pressure as global rate cuts stir uncertainty, new report says

<keyword id="20207838" type="General" weightage="20" keywordseo="dsp-mutual-fund" source="keywords">DSP Mutual Fund</keyword>'s September 2024 Netra report credits <keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>'s strong economic recovery to increased fiscal expenditure. The report, which tracks current economic trends and market insights through various charts, emphasizes the need for the private corporate sector and households to play a larger role in sustaining the ongoing growth momentum. Netra also pointed out an unsettling calm in the markets, with the Nifty 50 TRI index maintaining an impressive 53-month streak without a 5% decline and 13 years without a drop greater than 10%. Sahil Kapoor, Head of Products and Market Strategist, DSP Mutual Fund, said, "The calm in the markets, marked by an unnerving lack of volatility, is a double-edged sword. While it provides a sense of stability, it also masks underlying risks that could surface unexpectedly, catching investors off guard. To ensure a sustainable recovery, there is a need for the private sector and households to take the lead, transforming fiscal stimulus into lasting economic growth." However, the report notes a shift in market dynamics, with the momentum factor, which has outperformed since the COVID-19 bottom, beginning to lose its dominance. At the same time, the quality factor, which had underperformed over the last four years, is now seeing a resurgence, potentially indicating a change in market leadership that could favour quality-orientated funds, both active and passive. The report highlights the critical role government spending has played in the recovery, with a focus on capital investments crucial for future growth. However, contributions from the private corporate sector and households have lagged. It also draws attention to a slowdown in India's per capita consumption, approaching lows seen in previous cycles. Given that consumption accounts for around 60% of GDP, it is vital that this sector grows at a rate exceeding GDP growth to stimulate private capital expenditure. India's <keyword id="487578" type="General" weightage="20" keywordseo="tax-collections" source="Orion">tax collections</keyword> have demonstrated robust growth, with gross tax revenue showing a five-year compound annual growth rate (CAGR) of 14 %. This growth, largely driven by <keyword id="6354751" type="General" weightage="20" keywordseo="income-tax" source="Orion">income tax</keyword>, indicates a rising dependency on capital gains and stock market performance, introducing new vulnerabilities to the economy. The banking and financial services sector (<keyword id="19910880" type="General" weightage="20" keywordseo="bfsi" source="keywords">BFSI</keyword>) has emerged as a key driver of market earnings, recording a 12 % increase in profit after tax (PAT) growth, significantly outpacing the 4.6 % growth observed in non-BFSI Nifty 50 companies. This disparity underscores the sector's importance in India's economic story and highlights promising investment opportunities.

India's strong economic recovery is led by fiscal expenditure: DSP MF

<ul><li>The <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> will conclude the three-day <keyword id="19913109" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (<keyword id="19918491" type="General" weightage="20" keywordseo="MPC" source="keywords">MPC</keyword>) meeting today.</li><li>The central bank is expected to announce its decision on policy rates.</li><li>The <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> has maintained the <keyword id="20094323" type="General" weightage="100" keywordseo="repo-rate" source="keywords">repo rate</keyword> at 6.50% for the past nine meetings.</li></ul>The Reserve Bank of India (RBI) is set to conclude the three-day Monetary Policy Committee (MPC) meeting today, with Governor <keyword id="19913110" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="keywords">Shaktikanta Das</keyword> expected to announce the central bank's decision on policy rates. The meeting, which <a href="https://www.businessinsider.in/finance/news/rbis-monetary-policy-committee-meeting-begins-today-announcement-on-october-9/articleshow/113999887.cms">began</a> on October 7, has garnered significant attention, as the RBI has maintained the repo rate at 6.50% for the past nine meetings. The repo rate has remained steady since the RBI adopted a cautious stance to balance inflation control and <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword>. Key factors that the MPC is weighing include persistent inflationary pressures, particularly in food prices, as well as global economic uncertainties. According to data from the Ministry of Statistics &amp; Programme Implementation, while All India Consumer Price Index (CPI) inflation moderated to 3.65% in August--within the RBI's target band of 2-6%. <keyword id="19999654" type="General" weightage="20" keywordseo="food-inflation" source="keywords">Food inflation</keyword> remains elevated at 5.65%, above the central bank's medium-term target of 4%. This, coupled with rising global crude oil prices due to geopolitical tensions in West Asia, has intensified concerns over inflation. Despite these challenges, the RBI has so far opted for a status quo on the repo rate, aiming to foster economic recovery after the pandemic. However, today's announcement will be closely watched to see if the central bank shifts its stance, especially given the external pressures and uncertainties surrounding global markets. Economists, however, have noted that the RBI will not make any changes in its policy stance before December. "With the focus on taming headline inflation, the RBI is likely to hold the rates although the core inflation is within the limit. It is possible the RBI may shift to the neutral stand" said M Govind Rao, Member, of the Fourteenth Finance Commission and former Director, of the National Institute of Public Finance and Policy. On September 18, the US Federal Reserve announced a steep 50 basis points interest cut in its review meeting. US Fed announced the rate cuts after holding interest rates steady for eight straight meetings. "In this overarching macroeconomic setting of heightened geopolitical tensions, core inflation inching upwards, oil price volatility, and high food inflation, we anticipate a change in the RBI's policy stance from "withdrawal of accommodation" to "neutral" at its forthcoming MPC meeting on October 9, 2024. However, we do not see any rate action coming and the benchmark interest rates may not undergo any change" said Manoranjan Sharma, Chief Economist, Infomerics Ratings. Earlier this month the central government appointed three new members to the monetary policy committee. The MPC comprises three members from the RBI and three external members appointed by the Central Government. With inputs from ANI. SEE ALSO: <a href="https://www.businessinsider.in/business/auto/news/byd-emax-7-electric-mpv-launched-in-india-starting-at-26-9-lakh/slidelist/114046121.cms">BYD eMax 7 electric MPV launched in India starting at ₹26.9 lakh</a> <a href="https://www.businessinsider.in/personal-finance/news/heres-how-a-reddit-user-was-able-to-get-an-iphone-16-at-under-27000/articleshow/114035179.cms">Here’s how a Reddit user was able to get an iPhone 16 at under ₹27,000</a> <a href="https://www.businessinsider.in/stock-market/news/hyundai-swiggy-ather-upcoming-large-ipos-in-india/slidelist/114014140.cms">Hyundai To Swiggy: Everyone wants to cash in on the IPO bonanza</a>

RBI MPC announcement today: Rates unlikely to change, RBI may change stance to neutral

<ul><li>The <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword>’s <keyword id="20104157" type="General" weightage="20" keywordseo="monetary-policy" source="keywords">monetary policy</keyword> meeting is set to begin today.</li><li>The central bank will announce the outcome of the <keyword id="22684891" type="General" weightage="20" keywordseo="MPC-meeting" source="keywords">MPC meeting</keyword> on October 9.</li><li><keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> has kept the <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword> unchanged for the last nine consecutive meetings.</li></ul>The Reserve Bank of India (RBI) is set to begin its three-day monetary policy meeting on Monday and will run from October 7 to October 9. All eyes are on the outcome, as the central bank has kept the repo rate unchanged for the last nine consecutive meetings. The repo rate, currently at 6.50%, has remained steady since the RBI adopted a cautious stance to balance inflation control and economic growth. The Monetary Policy Committee (MPC), headed by RBI Governor <keyword id="19913110" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="keywords">Shaktikanta Das</keyword>, is expected to weigh key factors like inflationary trends, global economic uncertainties, and domestic growth prospects. Inflation continues to be a challenge, particularly in food and fuel prices, which saw a surge earlier this year. As per the data from the Ministry of Statistics &amp; Programme Implementation, though the All India Consumer Price inflation in August was 3.65%, which is under the RBI target band the food inflation stands at 5.65% and it remains above the RBI's medium-term target of 4%. Despite these inflationary pressures, the RBI has opted for a status quo on the repo rate, primarily to support economic recovery post-pandemic. However, there are rising concerns that external factors, like the rising global crude oil prices and tensions in West Asia, may compel the RBI to reconsider its current stance. Earlier this month the central government appointed three new members to the monetary policy committee. The MPC comprises three members from the RBI and three external members appointed by the Central Government. The newly reconstituted committee consists of the Governor of the Reserve Bank of India as the Chairperson, ex officio; the Deputy Governor of the Reserve Bank of India, in charge of monetary policy--Member, ex officio, and one officer of the Reserve Bank of India, nominated by the Central Board -- Member, ex officio. The new external members included in the MPC are Professor Ram Singh, Director, Delhi School of Economics, University of Delhi, Saugata Bhattacharya, economist; and Dr. Nagesh Kumar, Director and Chief Executive, Institute for Studies in Industrial Development. Market participants and analysts are closely monitoring this meeting for any forward guidance on future rate actions. Many believe the central bank will continue its wait-and-watch approach, but a surprise rate hike cannot be entirely ruled out. On September 18, the <keyword id="19901377" type="General" weightage="20" keywordseo="US-Federal-Reserve" source="keywords">US Federal Reserve</keyword> announced a steep 50 basis points interest cut in its review meeting. US Fed announced the rate cuts after holding interest rates steady for eight straight meetings. The outcome of the MPC meeting will be announced on October 9 and will set the tone for future monetary policies amid the changing global economic landscape. The Reserve Bank of India (RBI) will commence its three-day monetary policy meeting on Monday, October 7th, and continue until October 9th. The result of this meeting is eagerly anticipated, as the central bank has maintained a steady repo rate for the past nine consecutive meetings. The repo rate has remained at 6.50% since the RBI adopted a cautious approach to balance inflation control and economic growth. The Monetary Policy Committee (MPC), led by RBI Governor Shaktikanta Das, will consider various factors, including inflationary trends, global economic uncertainties, and domestic growth prospects. Inflation remains a challenge, particularly in food and fuel prices, which surged earlier this year. According to data from the Ministry of Statistics &amp; Programme Implementation, All India Consumer Price inflation in August was 3.65%, within the RBI's target band, however, food inflation stands at 5.65%, exceeding the RBI's medium-term target of 4%. Despite inflationary pressures, the RBI has opted to maintain the repo rate to support economic recovery post-pandemic. Nonetheless, rising concerns about external factors, such as increasing global crude oil prices due to tensions in West Asia, may prompt the RBI to reassess its current stance. Earlier this month, the central government appointed three new members to the monetary policy committee. The MPC consists of three members from the RBI and three external members appointed by the Central Government. It is worth noting that on September 18, the US Federal Reserve announced a substantial 50 basis points interest rate cut in its review meeting, reversing its previous stance of holding rates steady for eight consecutive meetings. With inputs from ANI. SEE ALSO: <a href="https://www.businessinsider.in/business/auto/news/september-auto-sales-automakers-report-a-decline-mahindra-and-mahindra-overtakes-tata-motors/articleshow/113925972.cms">September Auto sales – Automakers report a decline, Mahindra and Mahindra overtakes Tata Motors</a> <a href="https://www.businessinsider.in/business/auto/news/ola-electric-continues-to-lose-market-share-as-bajaj-auto-and-tvs-motor-gain/articleshow/113900252.cms">Ola Electric continues to lose market share as Bajaj Auto and TVS Motor gain</a> <a href="https://www.businessinsider.in/business/telecom/news/airtel-is-using-ai-powered-technology-to-block-spam-calls-and-messages/articleshow/113691942.cms">Airtel is using AI-powered technology to block spam calls and messages</a>

RBI's monetary policy committee meeting begins today, announcement on October 9

<ul class="summary-list"><li>Fitch Ratings revised its office delinquency forecast for 2024 and 2025.</li><li>The sector's recovery will be slower than after the global financial crisis, it said.</li></ul>Things are not looking up for the US office sector, with loan performance set to slump even further in 2025, <a target="_blank" href="https://www.fitchratings.com/research/structured-finance/us-commercial-real-estate-office-performance-will-worsen-through-2025-07-06-2024">Fitch Ratings</a> said.After the market significantly underperformed Fitch's year-to-date expectations in May, the rating agency has revised its office delinquency forecast to 8.4% and 11% through this and next year. That's up from projections of 8.1% and 9.9%, respectively.Driving the fallout are still-elevated interest rates, cooling economic growth, and a stricter lending environment, Fitch wrote on Friday. That's all happening against a broad decline in office demand, as hybrid or fully remote work has become an entrenched norm.By one estimate, the work-from-home trend could fuel a <a target="_blank" href="https://www.businessinsider.com/office-commercial-real-estate-crash-price-correction-debt-morgan-stanley-2024-2">30% peak-to-trough price correction for office properties</a>, and vacancy rates have only kept rising, hitting a record high of nearly 14% in May, the <a target="_blank" href="https://www.nar.realtor/research-and-statistics/research-reports/may-2024-commercial-real-estate-market-insights">National Association of Realtors</a> found."The recovery of the office sector will be slower and more drawn out during this cycle than following the global financial crisis and will lead to permanent impairments in property values, weaker performance, and higher loan losses," Fitch wrote on Friday.Fitch anticipates low refinanceability on maturing office loans through this year, with 16%-21% able to refinance. Already, offices have the lowest refinancing percentage of major property types, the rating agency noted, with the year-to-date refinancing rate hitting 5% in May.While most loans will remain cash-flow positive in the next two years, lower-quality office properties are more at risk."Eighteen out of 44 Fitch-rated office [single asset, single borrower] transactions are Fitch Loans of Concern due to refinance concerns, elevated tenancy rollover, declining occupancies/rents, high concentrations of dark/sublease spaces, limited performance stabilization and deteriorating market fundamentals," the note said.A looming commercial real estate loan crash has been a persistent worry among analysts and market observers, with <a target="_blank" href="https://www.businessinsider.com/banks-commercial-real-estate-loan-sales-debt-interest-rates-2024-1">$2.1 trillion in debt</a> expected to mature by the end of next year.

The US office sector will worsen through next year, and the recovery will be slower than after the 2008 crisis, Fitch Ratings says

The Reserve Bank of India (RBI) may begin lowering <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword> around October, provided that external factors like weather conditions and international commodity prices do not cause any disruptions, the credit rating agency, Crisil said in its report. The credit rating agency further anticipated that it expects "two rate cuts this fiscal." It said that the decision of the <keyword id="19913109" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (MPC) decision to hold rates in its recent announcement was due to the elevated <keyword id="19999654" type="General" weightage="20" keywordseo="food-inflation" source="keywords">food inflation</keyword>. The climate conditions such as weather events are frequently changing and they need to be monitored. Going ahead, it anticipated that the macroeconomic environment would be better, creating a background for a rate cut. "The food challenge to a rate cut is expected to ease as agriculture prospects look better than last year. The monsoon has been above normal (7 per cent above the long period average as of August 7), and sowing has picked up across major foodgrains. As agriculture prospects become clearer by September, we expect it to pave the way for a rate cut," the S&amp;P's arm added in its report. In a move reflecting its cautious approach amid ongoing economic uncertainties, the RBI has decided to keep the <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword> unchanged at 6.5 per cent. The decision to keep the repo rate steady comes amidst persistent concerns about <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword>, which remains above the RBI's target range. The central bank's commitment to bringing inflation down to its 4 per cent target continues to face challenges due to ongoing food inflation and other economic factors. Noting a likely uptick in core inflation, the report added that factors such as international freight costs, geopolitical risks to crude oil prices, and hikes in domestic telecom tariffs could affect this indicator. Anticipating the growth, it added, "The pace of growth of the economy is expected to ease this year, with lower fiscal support as the government pursues <keyword id="20101140" type="General" weightage="20" keywordseo="fiscal-consolidation" source="keywords">fiscal consolidation</keyword>." Announcing the MPC's decision on August 8, RBI Governor Shaktikanta Das expected the real Gross Domestic Product (GDP) growth of 7.2 per cent for the fiscal year 2024-25. Governor Das emphasized that the RBI remains vigilant regarding inflationary pressures and will take necessary actions to maintain price stability while supporting the country's economic recovery. The MPC's decision reflects a balanced approach, aiming to control inflation without stifling growth. The adjustments in repo rate have a direct effect on <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword> and job creation. The lower interest rates tend to stimulate economic growth by making borrowing cheaper for businesses.

RBI expected to begin rate cuts in October, with two reductions this fiscal: Crisil

<ul class="summary-list"><li><keyword id="23254035" type="General" weightage="20" keywordseo="home-improvement-retailers" source="keywords">Home improvement retailers</keyword> are among the first to see a lift from the Fed's rate cut.</li><li>Share prices for <keyword id="20320193" type="General" weightage="20" keywordseo="Home-Depot" source="keywords" meta.keywordsubtype="org" meta.entityname="Home Depot" meta.hostid="261" meta.entityid="Home Depot">Home Depot</keyword> and <keyword id="23254034" type="General" weightage="20" keywordseo="Lowes" source="keywords" meta.keywordsubtype="org" meta.entityname="Lowe's" meta.hostid="261" meta.entityid="Lowe's">Lowe's</keyword> are up, and <a target="_blank" href="https://www.businessinsider.com/fed-interest-rates-cut-jerome-powell-labor-market-mortgage-pantheon-2024-9">spending on projects is expected to follow</a>.</li></ul>The US Federal Reserve's decision Wednesday to <a target="_blank" class="" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">cut rates by half a percentage point</a> has created a flurry of immediate reactions, but the real effects of the policy are likely to take several months to bear out. Still, some areas of the economy are already seeing a lift in response to the news — and the fact that the Fed went with the larger of the two most likely options under consideration. <a target="_blank" href="https://www.businessinsider.com/comparing-lowes-vs-home-depot-2023-12">Home improvement retailers,</a> in particular, are among the companies who were primed to come out of the gate strong with a rate cut, and, true to form, shares for Home Depot and Lowe's were up as of Thursday's market close. "Home-related companies should soon see the beginnings of fundamental recovery exiting this year," Mizuho analyst David Bellinger told Business Insider. "Aside from any initial noise in the market, Home Depot and Lowe's should keep grinding higher as all this comes together." And while a rising <keyword id="19998639" type="General" weightage="20" keywordseo="stock-price" source="keywords">stock price</keyword> carries its own benefits for a company, the uptick is a signal of a much more important change still to come: sales. Executives for both Home Depot and Lowe's have characterized their businesses as being constrained by low housing turnover and high borrowing costs, both of which are results of the Fed's tight interest rate policy. Home Depot CFO Richard McPhail described his company's core customer as having "<a target="_blank" href="https://www.businessinsider.com/home-depot-earnings-americans-in-deferral-mindset-consumer-spending-2024-8">a deferral mindset</a>" in spite of being in a generally healthy financial position. In short, most <a target="_blank" href="https://www.businessinsider.com/americans-doing-less-diy-worrying-sign-economy-lowes-earnings-2024-8">big-ticket spending on home improvement</a> comes from one of two places: people buying and selling homes and homeowners renovating existing homes with borrowed money. Unless they have to fix something urgently, a lot of folks have decided they're better off waiting to upgrade. Fed Chairman Jerome Powell talked about the impact on the <keyword id="20759748" type="General" weightage="20" keywordseo="housing-market" source="keywords">housing market</keyword> in his remarks following Wednesday's announcement. "The housing market is in part frozen because of lock-in with low rates. People don't want to sell their home," he said. "As rates come down, people will start to move more, and that's probably beginning to happen already." What's more, Powell signaled in his speech that further cuts are likely if the data support them, which can encourage some of those sitting on the sidelines to go ahead with a new mortgage or credit line with the expectation that they can simply <a target="_blank" href="https://www.businessinsider.com/personal-finance/personal-loans/how-to-refinance-personal-loan">refinance</a> in a few months when rates come down further. Additionally, Home Depot and Lowe's have taken great care to manage investor expectations through the <a target="_blank" href="https://www.businessinsider.com/lowes-dicks-macys-sound-alarm-us-shoppers-spending-2023-8">slumping sales and slimmer profits</a> over the past year. In particular, both companies <a target="_blank" class="c-link" href="https://www.businessinsider.com/home-depot-1-billion-wage-boost-improved-worker-safety-satisfaction-2023-5">continued to invest in their stores</a> with the expectation that pent-up demand would eventually be unlocked. (Truist Securities analyst Scot Ciccarelli has referred several times to a "coiled spring" for the retailers.) Max Rakhlenko, a TD Securities analyst, said in a note on Wednesday that Lowe's management was expecting a "phased recovery" in which homeowners start with smaller projects before getting more comfortable with larger ones that require tapping into their house's equity. "We're aggressively working in this downturn," Lowe's CEO Marvin Ellison said during his earnings call last month, adding, "Whenever the macro inflection occurs, we just want to be ready to take advantage of it." It appears Ellison may not have to wait much longer. Correction: September 20, 2024 — An earlier version of this story misstated the day a TD Securities analyst sent out his note on Lowe's. It was Wednesday, not Thursday.

Home Depot and Lowe's are already seeing the first of many likely benefits from the Fed's rate cut

<ul class="summary-list"><li>Bitcoin peaked at $61,337 on Tuesday, the largest intraday gain since early August.</li><li>The rise comes amid anticipation that the Fed will deliver a half-point rate cut.</li></ul>The end-of-summer doldrums may be over for <a target="_blank" href="https://markets.businessinsider.com/currencies/btc-usd?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">bitcoin</a>.The token's price climbed as much as 6.4% to $61,337 on Tuesday, its biggest intraday jump since August 8. Investors are anticipating the Federal Reserve's long-awaited rate cut tomorrow, which will be announced at the end of the central bank's two-day policy meeting. Markets are still unsure how deep the cut will be, pricing in a <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">63% probability of a 50-basis-point move</a>.Regardless of the size of the cut, investors buying up bitcoin are anticipating the looser lending conditions will lead to more speculative behavior.One specific outcome Morgan Stanley recently identified as the <a target="_blank" href="https://markets.businessinsider.com/news/stocks/best-case-scenario-stock-market-outlook-fed-rate-cut-ms-2024-9?_gl=1*1l9q8vs*_ga*MTMxNDIwNDI1Ni4xNjc1Njg3OTU4*_ga_E21CV80ZCZ*MTcyNjU4Nzg1OS42MTguMS4xNzI2NTkyNDA1LjU3LjAuMA..">best-case scenario for equities</a> would be a 50-basis-point cut accompanied by Fed messaging that the economy is on sure footing. The downside risk there is that investors will be spooked by a deep cut, because of what they think it signals about the economy.To that end, Tuesday's surprisingly strong retail data pushed back worries of a downturn, and may have contributed to bitcoin's rise."Retail sales beating expectations are being received well by the market, alleviating recession fears for now. We could be seeing a recovery of investors' appetite for risk-on assets like crypto, instigating more flows into Bitcoin spot ETFs," said Leena ElDeeb, a research analyst at 21Shares.Since bitcoin peaked at nearly $74,000 in March, the apex token has been unable to regain its momentum. <a target="_blank" href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-record-high-trump-harris-election-crypto-regulation-2024-9?_gl=1*zn7ct8*_ga*MTMxNDIwNDI1Ni4xNjc1Njg3OTU4*_ga_E21CV80ZCZ*MTcyNjU4Nzg1OS42MTguMS4xNzI2NTkyOTA0LjYwLjAuMA..">Seasonal factors</a> weakened the spot bitcoin ETF inflows this summer while deteriorating macro conditions <a target="_blank" href="https://markets.businessinsider.com/news/stocks/safe-defensive-stocks-ai-investing-rally-nvidia-semiconductors-selloff-outlook-2024-9?_gl=1*7t9zvb*_ga*MTMxNDIwNDI1Ni4xNjc1Njg3OTU4*_ga_E21CV80ZCZ*MTcyNjU4Nzg1OS42MTguMS4xNzI2NTkzMDE0LjYwLjAuMA..">drove investors toward safe, risk-off assets</a>.This may be changing. Crypto fund investments have risen by $436 million last week after two weeks of outflows, FxPro senior market analyst Alex Kuptsikevich wrote on Monday, citing CoinShares data."The surge in inflows at the end of the week was driven by a significant shift in market expectations for a potential 50bps Fed rate cut following comments from former New York Fed President Bill Dudley," he said.

Bitcoin is surging on hopes rate cuts will drive a speculative rush

With <keyword id="19899478" type="General" weightage="20" keywordseo="US" source="keywords">US</keyword> unemployment rates jumping from 4.1% to 4.3% in July 2024, the highest ever since October 2021, global markets fear an impending <keyword id="19950649" type="General" weightage="100" keywordseo="recession" source="keywords">recession</keyword> and a slowdown hitting the world's largest economy. Amidst a weakening labor market, even as <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword> remain consistent at a 23-year peak range of 5.25-5.5%, the number of unemployed people in the US inched up to 7.9 million in July. Between January and June this year, the US economy added an average of 2,22,000 new jobs every month, which were significantly lower than the monthly average of 2,51,000 in 2023, and 3,77,000 in 2022. However, in July, the economy only managed to generate 1,14,000 new jobs. Even Goldman Sachs economists have upped the probability of recession hitting the US by 2025 to 25%, from its previous estimate of 15%. And while they maintain that there still remain "several reasons to not fear a slump", it is hard to overlook the fact that July's employment figures have already breached the Sahm rule, which is considered a tipping point for foreseeing economic slowdowns. But is that indication enough, or are we reading too much into short-term market developments? Lets find out. First, what is this Sahm rule? Named after formed Fed economist Claudia Sahm, the rule says that a recession is almost certain, and more likely already underway, if the <keyword id="20054242" type="General" weightage="20" keywordseo="unemployment-rate" source="keywords">unemployment rate</keyword> (based on a three-month moving average) inches up by 0.5% from its lowest point in the past year. It has been failsafe so far, proving right for every US recession since 1970. But even as Sahm herself, and other economists believes that a recession is not imminent this time around, despite weak employment figures, the ongoing shockwaves in the global markets are hard to ignore. Japan's Nikkei 225 plunged 4,451 points today, and closed the day around 12.4% lower, registering one of the worst losses it has seen since 1987. Closer home, Sensex fell sharply from the 80,000 mark it had previously breached by about 2,500 points to trade at around 78,400.21. Nifty also dipped around 2.5%, and was trading at about 24,098 points. Vishnu Kant Upadhyay, AVP, Research and Advisory at Master Capital Services Ltd notes, the significant domestic equities sell-off has been primarily driven by weak global sentiments following disappointing U.S. economic data, particularly non-farm payrolls, manufacturing PMI, and jobless claims, which have raised concerns about a potential economic slowdown in the world’s largest economy. Additionally, the yen carry trade has further dampened global sentiment. "However, given the prevailing bullish trend, it is unlikely that prices will remain low for an extended period. A recovery from these lower levels is a probable scenario", he continued. Even Anup Kurup, CIO at InCred Global Asset Management sees this as short-term, largely because of the "positioning in the derivative markets with many players selling volatility across many asset classes. A big move up in VIX on Friday after the disappointment in the jobs report would have likely triggered margin calls on the short volume strategies, which were mushrooming off late", he explained. So, what exactly is a recession? This is when a country experiences a temporary decline in its overall economic activity, which has a cascading effect on lowering its GDP, income, sales and employment numbers. Generally, if the a country's GDP continues to fall for two successive quarters, it is said to have entered recession. When there is a recession, individuals and businesses tend to spend less, which further hinders wealth creation, industrial activity and trade, perpetuating the cycle. However, in the first three months of 2024, US household wealth skyrocketed to a record $160 trillion, while household net worth touched $5.1 trillion, largely driven by the significant exposure of Americans to the stock markets, and the subsequent gains. Notably, last recession (2008-09) was marked by ballooning household debt, which grew just 2.19% in the last quarter. So, while a recession might not be immediately on the cards, the upcoming months of September and December, where the Fed is likely to announce significant rate cuts, will be tracked intently. A rate cut would increase money circulation in the economy, thereby boosting spending and countering recession. Transfer Pricing and International Economics subject matter expert Akash Kalra notes that this crash indicates a shift from rapid growth to a slower growth trajectory, rather than an immediate recession. Despite recent weak economic indicators such as higher unemployment claims and soft data in construction, durable goods orders, home sales, and manufacturing, the overall assessment is that the U.S. economy is transitioning to a slower growth rate, which is more vulnerable but not necessarily indicative of a recession. "It is important to note that consumer spending has been growing at a moderate rate. In addition, capital spending remains strong due to robust corporate balance sheets and interest in AI technology. The housing market is subdued but stable, and government spending continues to rise. Trade positions are unfavorable but not deteriorating. The <keyword id="19904332" type="General" weightage="20" keywordseo="Federal-Reserve" source="keywords" meta.keywordsubtype="org" meta.entityname="Federal Reserve" meta.hostid="261" meta.entityid="Federal Reserve">Federal Reserve</keyword> has signaled a potential rate cut in September due to softer economic data and diminishing <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword>. Accordingly, the U.S. GDP growth is expected to slow down for the rest of 2024 before picking up again in 2025", he continues.

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