empty
20.09.2024 09:32 AM
Financial Breakout: S&P 500, Dow Climb to All-Time Highs After Fed Rate Cut

This image is no longer relevant

Stock Markets Hit Records After Fed Decision: S&P 500, Dow Jones at All-Time Highs

The S&P 500 Index shot to record highs on Thursday, closing at new highs just after the Federal Reserve announced a 50 basis point rate cut and hinted at more steps to come.

Record rise of Dow Jones

The Dow Jones Industrial Average also pleased investors, closing the session at an all-time high, exceeding the 42,000 mark. Such a result was recorded for the first time in its long history.

Market leaders continue to grow

Large companies that dominated the stock market during the year once again strengthened their positions. Thus, Tesla (TSLA.O) shares rose by more than 7%, while Apple (AAPL.O) and Meta Platforms (banned in Russia) each added almost 4%.

Nvidia and semiconductors on the rise

Nvidia's (NVDA.O) success on the back of technological advances in the field of artificial intelligence led to a 4% rise in the company's shares. This contributed to a 4.3% increase in the PHLX semiconductor index (.SOX), strengthening the overall dynamics in the sector.

Optimism on Economic Data

An additional driver for the stock market was more optimistic jobless claims data, which exceeded analysts' expectations and increased global interest in risk assets.

Fed comments boost investor confidence

The Federal Reserve announced a rate cut on Wednesday, beating market expectations. At the same time, Fed Chairman Jerome Powell expressed confidence that inflation is under control. He noted that the U.S. economy continues to demonstrate resilience, and the central bank will adjust the pace of further policy easing depending on economic data.

"The Fed has given a fairly strong picture of the economy, and this has led to an influx of capital into sectors that have not performed well up until this quarter," said James Ragan, director of wealth management research at D.A. Davidson.

Lower interest rates and the Fed's confident statements about inflation control have boosted investor confidence, leading to record gains in the stock market and gains for large companies.

Small Caps on the Rise: Russell 2000 Gains on Rate Cuts

The Russell 2000 index of small-cap companies posted an impressive gain of 2.1%. Lower interest rates have opened up new opportunities for small-cap companies to cut operating costs and boost profits.

All-time high for the S&P 500

The S&P 500 index rose 1.70% to close at a record 5,713.64, its highest level ever. The Nasdaq also posted a strong gain of 2.51% to close at 18,013.98. The Dow Jones Industrial Average was not far behind, adding 1.26% to close at 42,025.19.

Most S&P 500 Sectors Gain

Of the 11 key S&P 500 sectors, eight ended the session in positive territory. Information technology led the gains, adding 3.08%, followed by consumer staples, which rose 2.2%.

Fedex Loses Ground

Fedex shares fell 10% in the after-hours session. The reason was the company's revision of its revenue forecasts for fiscal 2025, which negatively affected market expectations.

Expectations for a rate cut are growing

BofA Global Research has revised its forecasts and now expects a total of 75 basis points of rate cuts by the end of the year, which is higher than their previous forecast of 50 basis points. This could be a significant factor in future market dynamics.

Data: Historical Gains After Rate Cuts

The S&P 500 has gained an average of 14% in the six months following the first rate cut in a monetary easing cycle, according to Evercore ISI data going back to 1970. This historical data adds to investor optimism ahead of a new round of monetary easing.

September: Traditional Losses for U.S. Stocks

September is a rare month for U.S. stock market investors. On average, the S&P 500 has lost 1.2% in the month since 1928, making it one of the weakest periods for stocks.

Banking Sector in Positive Light

Despite the overall negative trend in September, the S&P 500 banking sector showed a confident increase of 2.5%. The leaders were such financial giants as Citigroup and Bank of America, which managed to show an improvement in results after cutting their base rates.

Progyny Loses Ground

Progyny, a company specializing in services for managing fertility programs, suffered a setback. After one of its major clients announced its intention to terminate the contract within 90 days, the company's shares fell by 33%. This was one of the largest declines of the day.

Rising Dominates the Stock Market

In the S&P 500 index, the number of advancing stocks outnumbered declining ones by two and a half times, which shows strong support from the market. The US stock market as a whole showed even more optimistic dynamics, where advancing stocks outnumbered declining ones by a ratio of 3.8 to one.

Trading Activity is High

Trading volume on U.S. stock exchanges also remained high, reaching 12.3 billion shares, well above the 20-session average of 10.8 billion shares. Such activity indicates continued investor interest in the stock market despite the usual September headwinds.

Small Caps Gain

It wasn't just large companies that benefited from lower interest rates. Small businesses, as represented by the Russell 2000 index, also posted a strong gain of 2.1%. Lower operating costs and cheaper borrowing helped small-cap companies gain ground.

Global Markets Are Also Booming

It wasn't just Wall Street that was seeing gains. The MSCI Global Equity Index, which includes stocks from 47 countries, also added 1.66% to 839.98, reflecting a global appetite for risk and growing optimism in global markets.

Jobless Claims Hits Four-Month Low

The number of new jobless claims in the U.S. came in well short of market expectations last week to Sept. 14, signaling continued recovery in the labor market, with the number of new applicants hitting a four-month low.

Bond Market Reaction: Yields Rise

The decline in jobless claims has led to a selloff in U.S. government bonds, sending yields higher. The yield on the 10-year Treasury note hit a two-week high of 3.768%, up 3.2 basis points to 3.719%, up from 3.687% late Wednesday.

Short-Term Bonds Under Pressure

In contrast, short-term Treasury yields fell amid data showing a drop in home sales. According to the report, existing home sales fell to their lowest since 2023. Following this, the yield on 2-year bonds fell 1.5 basis points to 3.5876% from 3.603% the previous day.

Dollar weakens amid choppy trading

Foreign exchange markets also reacted to the economic data. The dollar weakened amid choppy trading. The dollar index, which tracks the greenback against major global currencies such as the euro and yen, fell 0.41% to 100.61.

European markets remain positive: STOXX 600 rises

In Europe, the market reacted optimistically despite the Bank of England's decision to leave interest rates unchanged. The STOXX 600 index, which covers 600 European companies, added more than 1%. The British pound also strengthened, rising 0.5% to $1.3278, reflecting stable market sentiment in the region.

Economic data continues to weigh heavily on financial markets, with bond yields moving, exchange rates gyrating and optimism in Europe lingering despite central bank decisions.

BoJ braces for possible October rate hike

The busy week of interest rate decisions continues on Friday, with the Bank of Japan in the spotlight. While experts do not expect any drastic moves at this stage, the regulator is expected to surprise markets by raising rates as early as October, which would contrast with the global trend of monetary easing.

Yen continues to weaken

The Japanese yen weakened further against the US dollar, falling 0.21% to 142.57 per dollar, suggesting that Japanese monetary authorities are willing to maintain flexibility amid expectations for interest rate changes.

Gold Shows Confident Growth

Amid global economic uncertainty, gold showed confident dynamics, rising by 1.15% to $2,588.34 per ounce. Investors continue to view gold as a reliable means of protection against economic risks and inflation.

Oil prices rise on expectations of strong demand

Oil prices also showed gains, supported by expectations that lower global interest rates will support demand growth. Brent crude futures broke the $74 per barrel mark for the first time in a week, ending at $74.88, up 1.67% on the day. U.S. crude also strengthened, rising 1.47% to $71.95 per barrel.

Markets are closely watching the decisions of key central banks, with the Bank of Japan becoming one of the focus areas for a possible rate hike. The weakness of the yen, rising oil prices and stronger gold reflect current investor expectations amid these developments.

Thomas Frank,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

$500B AI, Netflix Record, Beijing Backing: What Surprises Markets Today

Tech Stocks Rise After $500B AI Investment Announcement Netflix Rises After Record Subscriber Numbers Procter & Gamble Rises After Upbeat Q2 Results Chinese Stocks Get Short-Term Boost Thanks to Beijing

Thomas Frank 10:23 2025-01-23 UTC+2

Netflix Wins Over Investors: What's Driving the Stock's Rapid Rise?

Stock markets rose on Wednesday, helped by U.S. President Donald Trump's ambitious initiatives and impressive financial results from major corporations. However, uncertainty over new trade tariffs continued to weigh

Thomas Frank 12:17 2025-01-22 UTC+2

One Year, 19% Growth: How Trump Is Rewriting the Rules for Global Markets

Financial markets greeted Donald Trump's second inauguration with mixed emotions. On the one hand, shareholders were enthusiastic about the pro-business agenda he was pushing. On the other hand, the currency

Thomas Frank 07:56 2025-01-21 UTC+2

Trump. Season 2: Intrigue, rates and a cryptocurrency with his own name

The dollar continued to show resilience on Monday, while Asian stock markets expressed cautious optimism. Investors were tensely awaiting Donald Trump's first steps in his second term, and speculated that

Thomas Frank 07:40 2025-01-20 UTC+2

Markets under pressure: What do China GDP numbers and US unemployment mean?

Morgan Stanley rises after higher fourth-quarter profit UnitedHealth falls as no quarterly sales estimates are released Investors analyze retail sales, unemployment data Indices fall: Dow 0.16%, S&P 0.21%, Nasdaq 0.89%

Thomas Frank 09:31 2025-01-17 UTC+2

Earnings Season and Global Rates: Asia Rejoices, Dollar Loses

Asian Stocks Rise, Fueled by Tech Yen Rises to One-Month High on Rising Rate Hike Bets Dollar Weakens as Cool U.S. Inflation Rekindles Rate Cut Hopes U.S. Earnings Open with

Thomas Frank 10:39 2025-01-16 UTC+2

Why the Dow and S&P 500 are growing, while the Nasdaq is stalling: detail analytics

US producer prices rose moderately in December Boeing fell after a report of low aircraft deliveries in 2024 Eli Lilly fell after a weak forecast for sales of a weight-loss

Thomas Frank 07:45 2025-01-15 UTC+2

Why Tighter AI Chip Regulation Is Spooking the Market, While Insurance Companies Are Cheering Investors

Moderna Slips After Cutting 2025 Sales Forecast Chip Stocks Fall as U.S. Tightens Controls on AI Chip Flows Health Insurers Rise as U.S. Proposes 2026 Payout Rates Indices

Thomas Frank 10:57 2025-01-14 UTC+2

Walgreens on the Rise: Best Day Since 1980 as Other Giants Sink

US Jobs Growth Beats Expectations in December S&P 500 Futures Fall Ahead of US CPI, Earnings Walgreens Set for Best Day Since 1980 After Beating First-Quarter Profit Constellation Brands Slips

Thomas Frank 06:28 2025-01-13 UTC+2

Nikkei and U.S. Futures Sink Quietly: Where to Look for Resilience

U.S. Stock Futures Fall After the Close Nikkei Down 0.9%, Chinese Bond Yields Rise U.S. Payrolls Data Crucial for Bond Market Dollar Surges Near 2-Year Highs, Rising for 6th Week

Thomas Frank 10:18 2025-01-10 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.