Rate Hikes on Pause: What it Means for Your MCA Investments

September 1, 2023

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Both the S&P 500 and Nasdaq indices have seen a positive upswing, reaching some pretty significant highs over the past few weeks. The uptick comes in the wake of recent economic data that indicates a slowing U.S. economy.

An important point to note here is the ADP National Employment report, which showed private payrolls rising by 177,000 jobs in August—quite a bit lower than the predicted 195,000. The data suggests a softening labor market, which in turn, is lowering the likelihood of upcoming Federal Reserve rate hikes.

At a glance:

S&P 500 Index: Highest in nearly three weeks

Nasdaq: Highest close since Aug. 1

ADP Report: 177,000 new jobs vs. estimated 195,000

Digital image of a hand tracking a dollar up a line graph Rate Hikes
Markets are up and the economy is slowing. Photo by Monstera.

Key Stock Market Reactions

While HP Inc, the computer hardware company, saw a decline, shedding 6.6% following its trim on annual forecasts, Mastercard and Visa, the payment giants, saw a slight gain of around 0.5%. Traders are betting an almost 89% probability that the Federal Reserve will hold off on any rate hikes this September.

At a glance:

HP Inc: Fell by 6.6% thanks to slowing demand

Mastercard & Visa: Gained 0.5% each, preparing to raise credit card fees

FedWatch Tool: 89% chance of no rate hike in September

Digital image of line graph with standard deviation boxes.  Rate Hikes
Loses for HP and gains for Mastercard and Visa. Photo by Monstera.

What Does This Mean for MCA Investment?

A cooling economy and softening labor market might mean a more cautious approach to rate hikes by the Federal Reserve. This could be good news for those looking into MCA investments because lower rates can offer a more favorable borrowing environment.

Final Thoughts

Understanding the intricacies of the U.S. economy, especially as it seems to be cooling down, is vital for making well-informed investment decisions. There is a lot of data out there, and, whilst nobody can predict the future, knowledge is power. As always, you might want to keep an eye on economic indicators like the upcoming personal consumption expenditures price index and non-farm payroll numbers for more clues on interest rates and investment opportunities.

Find out more about MCAs here.

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