Stocks close higher after Fed cuts interest rates
US weekly jobless claims rise moderately
Fed cuts rates by 25 bps
JP Morgan, Goldman weigh on Dow
Recasts with preliminary closing details, adds comments by U.S. Fed chief
By Chuck Mikolajczak
NEW YORK, Nov 7 (Reuters) -U.S. stocks closed higher on Thursday, after the Federal Reserve announced a cut of 25 basis points (bps) in interest rates, extending a sharp rally sparked by Donald Trump's return as U.S. president.
The Fed cut interest rates by a quarter of a percentage point as policymakers took note of a job market that has "generally eased" while inflation continues to move toward the U.S. central bank's 2% target.
Markets had almost fully priced in a 25-basis-point rate cut for the November meeting and will now eye upcoming commentary from the central bank for guidance about the path of monetary policy.
Investor expectations that Trump would lower corporate taxes and loosen regulations sparked a surge in each of the three major indexes in the prior session, with both the Dow Industrials and S&P 500 recording their largest one-day percentage jumps in two years.
"In an action-packed week, the Fed didn’t add any drama. Cutting by 25 basis points still keeps the federal funds rate restrictive, but not as restrictive as it was," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.
"Elections have consequences and we could see a marginal improvement in growth relative to their forecasts, but also a marginal increase in inflation relative to their forecasts. That would call for a more gradual pace of rate reductions."
According to preliminary data, the S&P 500 .SPX gained 44.84 points, or 0.76%, to end at 5,973.88 points, while the Nasdaq Composite .IXIC gained 285.89 points, or 1.51%, to 19,269.46. The Dow Jones Industrial Average .DJI fell 2.67 points, or 0.01%, to 43,727.26.
Communications services .SPLRCL led S&P sector gains, buoyed by a jump of more than 10% in Warner Bros Discovery WBD.O after a surprise third-quarter profit.
Financials .SPSY were the weakest of the 11 major S&P sectors, giving back some of the outsized gains in the prior session, as banks .SPXBK declined after a surge of nearly 11% on Wednesday. JP Morgan JPM.N and Goldman Sachs GS.N shares both fell to weigh on the Dow.
Expectations for continued rate cuts have been dialed back, however, as economic data continues to point to a resilient economy and the potential for higher inflation as a result of likely tariffs and increased government spending under Trump's administration.
Fed Chair Jerome Powell said no decision has been made on what sort of policy action the central bank will take in December but the central bank is "prepared to adjust our assessment of the appropriate pace and destination” for monetary policy amid uncertainty.
Investors are also eying whether Republicans could win control of both houses of Congress, making it easier for Trump's agenda to proceed.
Treasury yields, which have surged in recent weeks, retreated after a sharp rise on Wednesday, as the benchmark 10-year yield US10YT=RR eased from a four-month high of 4.479%, before briefly paring declines slightly after the Fed statement before turning lower again.
Data earlier on Thursday showed U.S. weekly jobless claims rose marginally last week, suggesting no material change in labor market conditions.
S&P 500 in the 5 days after presidential election https://tmsnrt.rs/4hk2wgw
US unemployment claims https://reut.rs/3YWF2XF
Reporting by Chuck Mikolajczak in New York
Additional reporting by Lisa Mattackal and Ankika Biswas in Bengaluru
Editing by Matthew Lewis
Relaterade tillgångar
Senaste nytt
Ansvarsfriskrivning: XM Group-enheter tillhandahåller sin tjänst enbart för exekvering och tillgången till vår onlinehandelsplattform, som innebär att en person kan se och/eller använda tillgängligt innehåll på eller via webbplatsen, påverkar eller utökar inte detta, vilket inte heller varit avsikten. Denna tillgång och användning omfattas alltid av i) villkor, ii) riskvarningar och iii) fullständig ansvarsfriskrivning. Detta innehåll tillhandahålls därför uteslutande som allmän information. Var framför allt medveten om att innehållet på vår onlinehandelsplattform varken utgör en uppmaning eller ett erbjudande om att ingå några transaktioner på de finansiella marknaderna. Handel på alla finansiella marknader involverar en betydande risk för ditt kapital.
Allt material som publiceras på denna sida är enbart avsett för utbildnings- eller informationssyften och innehåller inte – och ska inte heller anses innehålla – rådgivning och rekommendationer om finansiella frågor, investeringsskatt eller handel, dokumentation av våra handelskurser eller ett erbjudande om, eller en uppmaning till, en transaktion i finansiella instrument eller oönskade finansiella erbjudanden som är riktade till dig.
Tredjepartsinnehåll, liksom innehåll framtaget av XM såsom synpunkter, nyheter, forskningsrön, analyser, kurser, andra uppgifter eller länkar till tredjepartssajter som återfinns på denna webbplats, tillhandahålls i befintligt skick, som allmän marknadskommentar, och utgör ingen investeringsrådgivning. I den mån som något innehåll tolkas som investeringsforskning måste det noteras och accepteras att innehållet varken har varit avsett som oberoende investeringsforskning eller har utarbetats i enlighet med de rättsliga kraven för att främja ett sådant syfte, och därför är att betrakta som marknadskommunikation enligt tillämpliga lagar och föreskrifter. Se till så att du har läst och förstått vårt meddelande om icke-oberoende investeringsforskning och riskvarning om ovannämnda information, som finns här.
