Stocks hit record for second day, yields dip after Fed cut
Updates prices, adds comment
Fed cuts interest rates by 25 basis points
S&P 500, Nasdaq end at record highs, Stoxx 600 up 0.6%
Euro climbs amid German political turmoil
BoE, Swedish central bank cut rates, Norway holds as expected
By Koh Gui Qing and Kevin Buckland
NEW YORK/LONDON, Nov 7 (Reuters) -Shares on Wall Street scaled record highs on Thursday, lifting stock markets around the world, while U.S. Treasury yields retreated further after the Federal Reserve cut interest rates and as investors processed a second Donald Trump presidency.
The Fed lowered rates by 25 basis points on Thursday, as expected, noting that the job market has generally eased while inflation is moving toward its 2% target - saying price pressures had "made progress," compared with prior language that it had "made further progress."
“The Fed didn’t rock the boat," said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. "The big question now is will they cut again in December? Our best guess is they do, as inflation continues to improve.”
The S&P 500 .SPX rose 0.74%, the Dow Jones Industrial Average .DJI was flat, and the Nasdaq Composite .IXIC jumped 1.5%. The S&P 500 and the Nasdaq both ended at all-time highs for a second consecutive day. .N The MSCI index for world stocks .MIWD00000PUS climbed 0.9%, also to a record high.
Europe's broad STOXX 600 index .STOXX rose 0.6% after Asian shares gained earlier in the day, with even onshore Chinese blue chips rising 3% .CSI300 as investor optimism over potential stimulus outweighed concerns about worsening trade tensions. .SS .EU
Stocks are "rewarding the presumed likelihood of corporate tax cuts and perceiving a general penchant toward deregulation across industries as positive for earnings," said Naomi Fink, chief global strategist at Nikko Asset Management.
Treasury yields extended declines after the Fed's rate cut, though some investors warned that rates may not fall as steadily as some might have expected under a second Trump administration.
"A Republican sweep seems very likely, and looser fiscal policy as well as trade tariffs might lift not only growth but also inflation," said Matthias Scheiber, global head of portfolio management at Allspring Global Investments Systematic Edge Team in London.
The benchmark 10-year yield US10YT=RR was last at 4.3355%, down 9 basis points on the day, after a 14 basis point rise on Wednesday, and the 30-year yield was last at 4.5393%, down over 6 bps after the previous day's 15 bp jump. US30YT=RR US/
The dollar =USD fell 0.7% against a basket of its peers after logging its biggest one-day gain in more than two years on Wednesday. Traders said they were closing out profitable bets on the Trump presidency and ahead of the Fed's decision. USD/
The euro climbed 0.7% to $1.0803 EUR=EBS after Wednesday's 1.8% fall, as investors also digested political turmoil in Germany where Chancellor Olaf Scholz sacked Finance Minister Christian Lindner, causing the ruling three-party coalition to collapse and setting the stage for a snap election. FRX/
Deutsche Bank analysts said that while still early, the developments could be positive for the euro due to the potential confidence boost from a more stable German government and the direct economic effects of a potentially more proactive fiscal stance.
Germany's 10-year government bond yield was last up 4.8 basis points at 2.441% DE10YT=RR.
CENTRAL BANK DECISIONS
In advance of the Fed, the Bank of England cut interest rates by a quarter point on Thursday for only the second time since 2020. The bank said future reductions were likely to be gradual, as it saw higher inflation after the new government's first budget last week.
Sterling GBP=D3 extended its gains slightly after the decision and was last up 0.8% at $1.2986, following a 1.24% slide on Wednesday. GBP/
Central banks in Norway and Sweden also held meetings on Thursday, though they met market expectations and did little to disrupt currency markets. Norges Bank at the hawkish end of the developed market spectrum kept rates unchanged at a 16-year high, and Sweden's Riksbank cut by 50 bps.
Bitcoin BTC= reversed earlier losses and vaulted to another record high of $76,780 overnight. Trump had vowed to make the United States "the crypto capital of the planet."
Gold XAU= added 1.8%, following Wednesday's more than 3% tumble, to $2,707.21 an ounce. However, that was still not far from its recent record high of $2,790.15. GOL/
Oil reversed losses from a sell-off triggered by the U.S. presidential election. O/R
Brent crude oil futures LCOc1 rose 0.6% to $75.4 per barrel. U.S. West Texas Intermediate (WTI) crude CLc1 also added 0.5% to settle at $72.04. O/R
World FX rates YTD http://tmsnrt.rs/2egbfVh
Asian stock markets https://tmsnrt.rs/2zpUAr4
Reporting by Kevin Buckland in London and Koh Gui Qing in New York
Editing by Lisa Shumaker and Matthew Lewis
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