Wall Street advances as traders' bets rise for bigger Fed rate cut
-Wall Street's main indexes closed higher on Friday as investors honed in on the chance of a bigger interest rate cut by the Federal Reserve next week, with rate-sensitive small cap stocks outperforming.
Reports in the Wall Street Journal and other media had said early Thursday the Fed faces a difficult decision on how much to ease on Sept. 18. While the renewed hopes for a bigger cut were boosting large cap indexes on Friday they were most evident in thesmall cap index. Smaller companies are more sensitive to interest rate changes as they depend more on borrowed money and floating rate loans.
Jason Pride, chief of investment strategy and research at Glenmede in Philadelphia, said Friday's gains are probably related to Dudley's comment about a strong case for a 50 basis point cut.
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