Wall Street is witnessing volatility following a seven-month rally, as the Federal Reserve’s monetary tightening and a resurgence in inflation raise uncertainty about future interest rate hikes. Amidst this turbulence, investors are showing a preference for defensive sector stocks such as Consolidated Water Co., Vistra Corp., Xcel Energy Inc (NASDAQ:)., PepsiCo (NASDAQ:), Inc., and Lamb Weston Holdings (NYSE:).
The PCE Index reported a 0.4% inflation rise in September, marking a year-on-year increase of 3.4%. The Core PCE, which excludes volatile food and energy costs, rose by 0.3% month-on-month and 3.7% year-on-year due to a surge in prices of goods and services. Energy prices jumped 1.7%, while food prices saw an uptick of 0.3%.
Since March 2022, the Federal Reserve has hiked interest rates by 525 basis points, maintaining its benchmark policy rate at 5.25-5.5% in September. There are hints of another 25-point hike before the end of the year. Adding to the uncertainty surrounding interest rates, hawkish Fed officials have revised the projected rate cut from four to two in 2024.
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