Market Reactions and Economic Predictions

Stocks are experiencing a notable rally, with the NASDAQ surging over 2% and both the Dow and S&P 500 setting new intraday records, indicating positive market sentiment despite previous declines. The Federal Reserve's outlook on the economy plays a central role in this volatility, as there are differing opinions on how aggressively the Fed will adjust interest rates moving forward. Some economists believe the Fed may be compelled to implement significant rate cuts due to an overly optimistic view of the labor market. Meanwhile, analysts suggest that the resilience of the U.S. economy could lead to higher terminal rates than currently anticipated, hinting at a possible shift back to a more restrictive monetary policy within the next 18 months.