Wall Street ends higher as rate-cut fever lingers
Sign up now: Get ST's newsletters delivered to your inbox
Traders work on the floor of the New York Stock Exchange, in New York City.
PHOTO: AFP
NEW YORK - Wall Street extended its rally on Dec 19, advancing on the day as last week’s dovish policy pivot from the Federal Reserve continued to reverberate and investors looked ahead to crucial inflation data.
Broad-based gains boosted all three major US stock indexes and nudged the S&P 500 to within one percentage point of its all-time closing high reached in January 2022. If the benchmark index closes above that level, that would confirm it has been in a bull market since bottoming in October 2022.
The blue-chip Dow nabbed another all-time closing high.
Smallcaps have had a strong run in December; the Russell 2000 index led gainers on Dec 19 and has surged over 11 per cent in December so far.
“It’s Fed fumes,” said Mr Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. “And there’s no real catalyst at this point in the calendar year to provide any kind of downside pressure.
“You have this momentum driven market that really has nothing in its way until after the holiday, except for PCE on Friday.”
At the conclusion of the central bank’s policy meeting last Dec 13, the Federal Open Market Committee signalled that it had reached the end of its tightening cycle and opened the door to rate cuts in the coming year.
Atlanta Fed president Raphael Bostic said on Dec 19 there was “no urgency” to begin cutting rates, given the strength of the economy and the slow rate at which inflation is cooling down towards the central bank’s 2 per cent annual target.
Even so, at last glance, financial markets are pricing in a 67.5 per cent likelihood that the Fed will implement a 25 basis point rate cut as soon as March, according to CME’s FedWatch tool.
“The market is probably running ahead of the Fed a little bit and the Fed is right to throw some water on that,” Mr Mayfield added. “But the markets aren’t really buying it and the Fed is not doing much to change the narrative.”
On the economic front, a report from the Commerce Department showed groundbreaking on new single-family homes surged 18 per cent to more than a one-and-a-half-year high in November.
Later in the week, the Commerce Department is expected to release its third and final take on third-quarter GDP on Dec 21, to be followed by its broad-ranging Personal Consumption Expenditures (PCE) report on Dec 22, which will cover income growth, consumer spending, and crucially, inflation.
According to preliminary data, the S&P 500 gained 27.88 points, or 0.59 per cent, to end at 4,768.44 points, while the Nasdaq Composite gained 97.86 points, or 0.66 per cent, to 15,003.06. The Dow Jones Industrial Average rose 250.03 points, or 0.67 per cent, to 37,557.98.
Boeing rose after German airline Lufthansa revealed it ordered 40 737-8 Max jets from the planemaker.
Kenvue climbed following a US court ruling in favour of the consumer health company in a lawsuit over the company’s drug Tylenol.
Amgen advanced after BMO upgraded the company’s shares to “outperform” from “market perform”. REUTERS
