Wall Street indexes buoyed by news of likely Fed interest rate cuts

Wall Street indexes buoyed by news of likely Fed interest rate cuts:

The main indexes of Wall Street rose on Thursday, with tech giant Apple reaching a record high. This came a day after the Federal Reserve hinted at the end of its aggressive rate hike campaign and indicated that borrowing costs would be lower in the following year.

The Fed, as expected, left interest rates unchanged on Wednesday, with Chairman Jerome Powell stating that the historic tightening of monetary policy was likely over. This was due to inflation falling faster than expected, and talks about cuts in borrowing costs were coming “into view.”

The Fed has raised its policy rate by 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 the end of 2024.

The dovish pivot in the central bank’s statement triggered a rally in equities, with the Dow Jones Industrial Average Index reaching fresh intra-day record highs on Thursday.

Investors are feeling optimistic about the prospect of three rate cuts penciled in for the next year. Money markets now see an 83.3% chance of at least a 25 basis point rate cut in March 2024, with almost fully pricing in another cut in May.

Investors also analyzed retail sales data for November, which showed a 0.3% monthly increase, contrary to estimates of a 0.1% decrease. Additionally, weekly jobless claims stood at 202,000 for the week ended 9 December, lower than the estimated 220,000.

Meanwhile, Apple’s shares added 0.7%, rising to an intra-day record high of $199.62, surpassing its previous peak in July.

At 9:42 am ET, the Dow Jones Industrial Average was up 35.43 points, or 0.10%, at 37,125.67, the S&P 500 was up 21.56 points, or 0.46%, at 4,728.65, and the Nasdaq Composite was up 92.21 points, or 0.63%, at 14,826.17.

Ten of the S&P 500’s top 11 sectors advanced, led by a 2.3% rise in real estate stocks, while the small-caps Russell 2000 index surged 2.9% to its strongest level since early February.

Following the historic tightening of monetary policy and indications of lower borrowing costs, Wall Street’s main indexes rose on Thursday. This was accompanied by tech giant Apple reaching a record high, signaling a positive outlook for the market in the coming year.