Equities rise on Fed rate cut optimism, Boeing jumps

NEW YORK - US stocks closed higher to record their sixth gain in seven sessions in muted trading on Dec 2, buoyed by gains in technology shares as expectations the Federal Reserve will cut interest rates next week remain elevated.

Equities declined on Dec 1 amid soft data on the manufacturing sector, a jump in US Treasury yields as Japanese bond yields surged, and a drop in bitcoin and crypto-related stocks.

But with a dearth of economic data for the session, the rise in bond yields eased and bitcoin rebounded, which enabled stocks to recover somewhat as the focus shifted to the Fed.

“It’s possible that both of those things are adding a little bit of volatility to the market at a time when there’s kind of a catalyst vacuum until the Fed,” said Mr Ross Mayfield, investment strategist at Baird in Louisville, Kentucky.

“On the flip side, it seems like largely you can take away positive consumer read-throughs on some of these Black Friday, Cyber Monday, data points. I’m more content or happier to see the strength in the consumer versus some of these things happening under the surface with yields and bitcoin. Those are things that will pass.”

The Dow Jones Industrial Average rose 185.13 points, or 0.39 per cent, to 47,474.46, the S&P 500 gained 16.74 points, or 0.25 per cent, to 6,829.37 and the Nasdaq Composite gained 137.75 points, or 0.59 per cent, to 23,413.67.

Boeing shot up 10.1 per cent as the biggest boost to the Dow, accounting for roughly 117 points to the upside, after the planemaker forecast higher deliveries for its 737 and 787 jets in 2026. Boeing also lifted the S&P 500 industrials index 0.9 per cent, making it the best performing of the 11 major S&P sectors.

Also higher was tech, which rose 0.8 per cent, fuelled by gains in megacaps Apple, Nvidia and Microsoft of about 1 per cent each, while Intel shares jumped.

Recent data has pointed to a gradually cooling economy, and policymakers had urged caution on rate cuts, warning that inflation pressures could be rekindled.

But comments from several Fed officials in recent days sent market expectations soaring for a rate cut at the central bank’s December meeting. Expectations for a rate cut of 25 basis points at the Fed meeting are at 89.2 per cent, according to CME’s FedWatch Tool, up from 63 per cent a month ago.

The Dec 5 release of the Personal Consumption Expenditures Index, the Fed’s preferred inflation gauge, could further solidify expectations for the central bank’s policy call next week.

Markets were also eyeing who may succeed Fed chairman Jerome Powell when his term ends in 2026, with reports suggesting White House economic adviser Kevin Hassett is a top contender. Mr Trump said on Dec 2 he would announce his selection early in 2026.

On the downside, Procter & Gamble declined 1.1 per cent after the consumer packaged goods company flagged a hit from the US government shutdown. Warner Bros Discovery climbed 2.8 per cent after reports said it received a second round of bids, including an offer from Netflix.

Crypto stocks advanced, including Strategy, up 5.8 per cent, and Coinbase, up 1.3 per cent, as bitcoin prices rebounded after its largest dollar loss since May 2021 in the previous session.

Advancing issues outnumbered decliners by a 1.01-to-1 ratio on the NYSE, while on the Nasdaq, declining issues outnumbered advancers by a 1.07-to-1 ratio.

The S&P 500 posted 11 new 52-week highs and three new lows while the Nasdaq Composite recorded 70 new highs and 100 new lows.

Volume on US exchanges was 15.35 billion shares, compared with the 18.42 billion average for the full session over the last 20 trading days. REUTERS