Wall Street’s Record-Setting Streak Continues Amid Rate Cut Hopes
NEW YORK (AP) — Wall Street’s impressive record-setting streak continued on Thursday, with major U.S. stock indices closing at all-time highs. The surge was primarily driven by investor optimism following a mixed set of economic data that solidified expectations for the Federal Reserve to implement its first interest rate cut of the year as early as next week.
Market Highlights
The S&P 500 advanced by 0.8%, reaching a new record of 6,587.47 points, marking its third consecutive day of all-time highs. The Dow Jones Industrial Average rallied significantly, climbing 617 points, or 1.4%, to close at 46,108.00, also a new record. The tech-heavy Nasdaq composite likewise saw gains, rising 0.7% to 22,043.07, setting its own record.
Treasury Yields Ease Ahead of Fed Meeting
Treasury yields eased in the bond market, with the yield on the benchmark 10-year Treasury easing to 4.02% from 4.04% late Wednesday. This movement reflected investor sentiment ahead of the Federal Reserve’s crucial meeting, where a rate cut is now widely anticipated.
Mixed Economic Signals Emerge
The economic reports released on Thursday presented a nuanced picture. One report indicated that more U.S. workers applied for unemployment benefits last week, signaling a potential uptick in layoffs and a further slowdown in the job market. This development, following a period of decelerated hiring, suggests the labor market might be entering a tighter phase.
Simultaneously, an inflation report showed consumer prices continuing to rise, albeit within economists’ expectations. U.S. households faced a 2.9% increase in the cost of living in August compared to a year earlier, a slight acceleration from July’s 2.7% inflation rate. While this figure remains above the Fed’s target of 2%, traders are largely betting that the central bank will prioritize addressing the softening labor market over immediate inflation concerns.
The Fed’s Delicate Balancing Act
“Right now, inflation is a key subplot, but the labor market is still the main story,” commented Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. This sentiment underscores the delicate balance the Federal Reserve must strike: stimulating the economy through lower rates without exacerbating inflation, a challenge potentially complicated by factors like tariffs.
Individual Stock Performance Shines
Individual stocks saw significant movement. Companies poised to benefit from lower interest rates, such as those in real estate and homebuilding, performed strongly. Builders FirstSource, a supplier of building materials, climbed 4.5%. Health care provider Centene surged 9% after announcing that its business results through August were on track to meet or exceed its full-year profit forecast.
Key Corporate News Roundup
In corporate news, Opendoor Technologies experienced a dramatic 79.5% jump. The online home-buying and selling platform announced the appointment of Shopify’s chief operating officer, Kaz Nejatian, as its new CEO, alongside a $40 million investment from one of its founders and an affiliated investment firm. Warner Bros. Discovery leaped 28.9% on reports that Paramount Skydance is preparing a bid to acquire the entertainment giant. Paramount Skydance itself saw a 15.6% increase following the news, just months after Skydance’s acquisition of Paramount in August. Grocer Kroger added 0.3% after reporting stronger-than-expected quarterly profits and raising the lower end of its full-year profit outlook. Conversely, Oracle fell 6.2%, giving back a portion of its nearly 36% gain from the previous day.
Global Markets Tick Higher
Globally, European markets generally ticked higher after the European Central Bank (ECB) opted to keep interest rates unchanged at its latest meeting. ECB President Christine Lagarde noted that future monetary policy moves are “not on a predetermined path.” France’s CAC 40 rose 0.8%, and Germany’s DAX gained 0.3%. In Asia, Shanghai stocks jumped 1.7%, though Hong Kong’s index edged down 0.4%.
