Interest Rate Expectations & Market Impact - The market has largely priced out the possibility of a 50 basis point rate cut in September, with the conversation shifting to either a 25 basis point cut or no cut at all [1][2][3] - Expectations for multiple rate cuts in 2024 are diminishing, with some suggesting only one or two cuts by the end of the year [2][15] - The potential for a "hawkish cut" is being considered, where the Federal Reserve cuts rates but maintains a hawkish stance [3] - The market's optimism, particularly in sectors like biotech, small caps, and homebuilders, is being re-evaluated in light of the hotter-than-expected PPI data [2] Sector Performance & Investment Strategies - Small-cap stocks have been significantly influenced by the prospect of rate cuts, and their performance may be hindered if rate cut expectations are scaled back [6][7][8] - Homebuilder stocks, which had been performing well, may see their "sizzle" diminish due to the changing rate cut narrative [4][5] - Wells Fargo Investment Institute has downgraded small caps to unfavorable, citing concerns about slowing economic growth and high borrowing costs [12] - An equal-weight strategy (RSP) is being considered as an alternative to mega-cap and small-cap investments, offering diversification without the risks associated with small caps [17] Economic Outlook & Fed Policy - The Producer Price Index (PPI) data has introduced uncertainty into the "no inflation" narrative and the likelihood of significant rate cuts [1][6][14] - The Federal Reserve is likely aiming for a consistent rate-cutting approach, avoiding the "stop-start" pattern of the 1970s and 1980s [15] - There's a risk that the Chairman of the Federal Reserve might temper expectations for a guaranteed 25 basis point rate cut at Jackson Hole [19] - Structurally higher interest rates are anticipated compared to the past decade, which will impact sectors like homebuilders [16]

The closing bell. Bloomberg's comprehensive cross-platform coverage of the U.S. market close starts right now. We are about 2 minutes away from the end of the trading day on this Tuesday.Scarlet Fu and Katie Greifeld here with you to take you through the closing bell. We've got a global simulcast. We're joined now by Carol Massar and tim stanwick bring together our bloomberg television, radio and you tube audiences worldwide as we pass through the most crucial moments of this trading day.And Carol, i feel l ...