Wall Street indexes jump as rate cut bets increase but suffer losses for week
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Traders working on the floor of the New York Stock Exchange, in New York City, on Nov 21.
PHOTO: REUTERS
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- US stocks rose sharply on Nov 21, driven by increased bets on a December Federal Reserve interest rate cut.
- The chance of a rate cut increased from 37% to 70%, according to the CME FedWatch Tool, influencing market sentiment.
- Despite Friday's gains, all major indexes posted weekly losses amid technology valuation and Fed policy concerns.
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NEW YORK - US stocks ended sharply higher on Nov 21 as traders boosted bets on an interest rate cut by the Federal Reserve in December, while all three of the major indexes posted losses for the week amid concerns over lofty technology valuations.
Shares of Nvidia briefly jumped in afternoon trading after sources familiar with the matter said the Trump administration is considering green-lighting sales of the company’s H200 artificial intelligence chips to China.
New York Fed president John Williams, a voting member of the Federal Open Market Committee, said the central bank can still cut rates “in the near term” without putting its inflation goal at risk.
Traders now see a roughly 70 per cent chance that the Fed will cut its main lending rate by 25 basis points in December, up from a near 37 per cent chance seen earlier in the day, according to the CME FedWatch Tool.
“The big tailwind today is that shift in rate cut odds for the December Fed meeting,” said Mr Ross Mayfield, investment strategist at Baird in Louisville, Kentucky.
According to preliminary data, the S&P 500 gained 64.89 points, or 0.99 per cent, to end at 6,603.65 points, while the Nasdaq Composite gained 192.83 points, or 0.87 per cent, to 22,273.08.
The Dow Jones Industrial Average rose 505.03 points, or 1.08 per cent, to 46,257.29.
Stocks have been volatile in the past two sessions, reflecting heightened investor anxiety over sky-high valuations in the technology sector and over what may happen at the December Fed meeting.
Boston Fed president Susan Collins said on CNBC that policy was “in the right place,” indicating scepticism about the need for another rate cut.
Her stance contrasts with dovish signals from some peers, a divergence that could stoke market volatility ahead of the December meeting.
Global brokerages remained divided over the likelihood of a December rate cut after the Nov 20 release of the long-delayed September jobs report, which marks the last employment reading before the Fed’s verdict in December.
Eli Lilly shares ended higher after the company became the first drugmaker to touch a US$1 trillion (S$1.3 trillion) market capitalisation.
Alphabet shares closed sharply higher as well on Nov 21. REUTERS
