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Federal Reserve Signals Deeper Rate Cuts for Next Year as Inflation Expected to Cool Faster

The ​Federal Reserve decided to maintain its benchmark interest rate at the current range of 5.25% to 5.50% for the third consecutive meeting. However, the Fed signaled that deeper rate cuts are likely for next year, as inflation is projected to cool faster than initially expected.

The ​Federal Open Market Committee (​FOMC) projected that rates have reached their peak at 5.4% and removed its forecast for an additional hike this year. Additionally, the FOMC estimates three rate cuts in 2024, with the benchmark rate expected to fall to 4.6%. For 2025, Fed members anticipate further reductions, expecting the central bank to lower rates to 3.6%.

This decision to forecast more rate cuts for next year is supported by the expectation that inflation will decrease at a quicker pace than previously anticipated. The Fed sees core ​PCE, which excludes food and fuel costs, at 3.2% for this year, down from a prior estimate of 3.7%. Inflation is anticipated to further decline next year to a 2.4% pace and to 2.2% in 2025.

Speaking at the press conference following the meeting, Federal Reserve Chairman Jerome Powell cautioned that it was premature to conclude that the central bank had successfully managed to control high inflation. The Fed’s outlook on the labor market remains largely unchanged, with the unemployment rate forecasted to rise to 4.1% next year and remain at that level in 2025.

The expectation of a slowing inflation picture and a resilient labor market has prompted optimism that the Fed may be able to achieve a “soft landing,” where inflation is managed without causing a broader economic downturn or a spike in unemployment. The growth outlook for this year was increased to 2.6% from 2.1%, with expectations for a GDP fall to 1.4% in 2024 before picking up the pace to 1.8% in 2025.

While it was anticipated that Federal Reserve Chairman Jerome Powell would push back against aggressive expectations for rate cuts next year, this pushback did not materialize. This has fueled fresh optimism that rate cuts will begin as early as March.

Overall, these developments have led to a sharp fall in Treasury yields, with the yield on the 10-year Treasury reaching a low not seen since August. This, in turn, has driven stock prices higher, with the Dow Jones Industrial Average reaching a record high.

Nasdaq Grapples with System Error, Causing Disruption to Stock Orders and Triggering Investigation

​Nasdaq, the exchange operator, experienced a system error on ​Wednesday, disrupting stock orders and leading to the cancellation of some orders. The issue arose at 2:41 pm ET on ​December 13, 2023, involving “FIX/RASH” ports, as indicated on the Nasdaq website.

The malfunction led to inaccuracies and delays in the delivery of execution reports for some customers. Nasdaq promptly took steps to resolve the issue, shutting down FIX/RASH for the remainder of the day. Despite this, the closing cross was successfully completed, and other markets continued to operate normally.

As a result of the error, customers may have observed discrepancies in executions. Nasdaq has assured the public that they are actively investigating the system issues related to FIX/RASH and pledged to provide an update once the matter is resolved.

Adobe (NASDAQ: ADBE) Grapples with Regulatory Scrutiny Impacting Revenue Projections and Stock Performance

Adobe (NASDAQ: ADBE) disclosed on Wednesday its encounter with regulatory scrutiny over subscription models, which has impacted both its revenue projections and stock performance. The San Jose-headquartered company revealed its collaboration with the Federal Trade Commission (FTC) since June 2022, responding to a civil investigative demand related to its disclosure practices and subscription cancellations.

Acknowledging the potential for substantial financial implications and penalties, Adobe highlighted the possibility of a significant impact on its financial outcomes and operational dynamics due to this ongoing matter. Additionally, the company’s acquisition of Figma, a cloud-based designer platform valued at $20 billion, has drawn scrutiny from Britain’s competition regulator.

The European Commission issued preliminary objections, while the Competition and Markets Authority expressed provisional concerns regarding competition related to this acquisition.

Looking ahead, Adobe’s projected revenue for the current quarter stands between $5.10 billion to $5.15 billion, falling short of the average analyst expectation of $5.19 billion according to LSEG data. Similarly, its fiscal 2024 revenue forecast ranges from $21.30 billion to $21.50 billion, also falling below market estimates.

Investing is like playing a game of financial chess, except the pieces are stocks, bonds, and real estate instead of kings, queens, and pawns. It’s a strategic dance with the market, where one wrong move could leave you in checkmate, but a well-planned investment can have you shouting “checkmate” to your financial worries. So, sharpen your wit and sharpen your investment skills, because in this game, the payout can be much more satisfying than just yelling “checkmate” at a board.