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WASHINGTON / HONG KONG — A cooler-than-expected inflation reading handed small-cap investors their best session in weeks Wednesday, as the Federal Reserve left borrowing costs unchanged and markets moved swiftly to price a higher probability of an autumn rate cut.
The Fed's Open Market Committee held its benchmark target range at 4.25%–4.50%, a decision widely anticipated heading into the meeting.
The catalyst that moved markets was the accompanying data: core consumer prices rose 2.4% year-on-year, a tenth of a percentage point beneath the 2.5% consensus estimate — a narrow miss, but one with outsized implications for rate-sensitive corners of the market.
The Russell 2000, tracked by the iShares Russell 2000 ETF (IWM), climbed 1.8%, outpacing large-cap benchmarks and signalling renewed appetite for domestic, smaller-balance-sheet companies that carry disproportionate exposure to floating-rate debt.
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