NEW YORK: Wall Street’s main indexes rose on Thursday, with tech giant Apple notching up a record high, a day after the Federal Reserve hinted an end to its aggressive rate-hike campaign and signaled that borrowing costs would be lower next year.
The Fed left interest rates unchanged on Wednesday, as expected, with Chair Jerome Powell saying the historic tightening of monetary policy was likely over, as inflation falls faster than expected, and discussions on cuts in borrowing costs were coming “into view”.
The Fed has raised its policy rate by a market-punishing 525 basis points since March 2022 in an effort to curb decades-high inflation. On Wednesday, 17 of 19 Fed officials projected the policy rate would be lower by end-2024.
The dovish pivot in the central bank’s statement triggered a rally in equities, with the Dow Jones Industrial Average Index clocking fresh intra-day record highs on Thursday.
“The fact that we’re not at a point where rates are being lowered because of some economic weakness, (but) rather the Fed re-calibrating its policy - markets seem to like that message,” said George Mateyo, chief investment officer at Key Private Bank.
Money markets now see an 83.7% chance of at least a 25-basis-point rate cut in March 2024, up from about 50% before the policy decision, while almost fully pricing in another cut in May, according to CME’s FedWatch tool.
Yield on the benchmark 10-year Treasury note slipped further, to 3.9152%, while the dollar tumbled to fresh four-month lows. Investors also parsed retail sales data for November, which rose 0.3% on a monthly basis compared with estimates of a 0.1% fall, according to economists polled by Reuters.
Another report showed weekly jobless claims stood at 202,000 for the week ended Dec. 9, lower than the estimated 220,000. Meanwhile, Apple’s shares rose to an intra-day record high of $199.62, surpassing their July peak, and were last up 0.2%.
Seven of the S&P 500’s 11 sectors advanced, led by a 2.4% rise in real estate stocks, while the small-caps Russell 2000 index surged 2.5% to hit its strongest level since early February.
At 11:26 a.m. ET, the Dow Jones Industrial Average was up 68.34 points, or 0.18%, at 37,158.58, the S&P 500 was up 10.97 points, or 0.23%, at 4,718.06, and the Nasdaq Composite was up 18.05 points, or 0.12%, at 14,752.02.
Adobe shed 5.5% after the Photoshop maker forecast annual and quarterly revenue below estimates. Moderna jumped 11.7% after an experimental messenger RNA cancer vaccine it co-developed with Merck cut the chance of recurrence or death from melanoma by half after three years, when paired with Merck’s Keytruda drug.
Occidental Petroleum added 3.4% after Warren Buffett’s Berkshire Hathaway acquired nearly 10.5 million shares of the oil giant for about $588.7 million. Foot Locker rose 7.9% after Piper Sandler upgraded the sportswear retailer to “overweight” from “neutral”.
Advancing issues outnumbered decliners by a 5.21-to-1 ratio on the NYSE and by a 2.80-to-1 ratio on the Nasdaq. The S&P index recorded 87 new 52-week highs and no new lows, while the Nasdaq recorded 235 new highs and 40 new lows.
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