Wall Street gains as traders raise bets on bigger Fed rate cut

Wall Street’s main indexes rose on Friday as investors reevaluated the possibility of a bigger interest rate cut by the Federal Reserve next week, while Photoshop maker Adobe tumbled after forecasting fourth-quarter earnings below estimates.

Traders’ bets of a 50-basis point rate cut jumped overnight, now standing at 47% compared with 14% on Thursday, CME’s FedWatch Tool showed.

Former New York Fed President Bill Dudley said there was a strong case for a 50-bps interest rate cut. Separate media reports calling the decision “a close call” also added to the uncertainty.

“A couple of articles were published in the Wall Street Journal and the Financial Times suggesting that a 50-bps move was still in play, which has led markets to once again reevaluate their expectations,” Deutsche Bank analysts said.

 

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