Fed Rate Cut Hopes Fuel Market Rally Today

Markets are pricing in another round of rate cuts after Trump’s NEC chief Kevin Hassett emerged as the frontrunner to replace Fed Chair Powell in May 2026. The Dow jumped +664 pts (+1.43%), with the Russell 2000 leading at +2.14%, while the S&P 500 and Nasdaq gained +0.91% and +0.67% respectively.

On the economic front, things are cooling down:

• Housing: Case-Shiller home prices +1.3% YoY (below the 1.7% inflation rate), with Chicago (+5.5%) and Phoenix (-2.0%) at opposite ends
• Pending home sales surprisingly beat expectations, up 1.9% MoM
• Consumer confidence dropped hard to 88.7 from 95.5, the lowest since April — timing coincided with the government shutdown uncertainty
• Business inventories flatlined at 0.0%, suggesting slower economic activity ahead

In earnings, Urban Outfitters crushed it with flagship brand sales up 12.5%, but Dell missed on revenue ($27.01B vs $27.27B expected) despite AI infrastructure strength, and HP fell 5% after a revenue miss.

The takeaway: Market’s betting on rate cuts are coming, but economic data is getting mixed. Softer consumer confidence + cooling housing could be exactly what the Fed needs to justify easing next month.