S&P 500 Soars to Record High as Fed Signals Rate Cuts

S&P 500 surges to record high close on euphoria over Fed rate cut

The blue chip Dow Jones Industrial Average also registered a record closing high, ending the session above 42,000 for the first time The S&P 500 surged to a record high close on Thursday, the day after the Federal Reserve cut interest rates by 50 basis points and indicated more rate cuts were on the horizon. The blue chip Dow Jones Industrial Average also registered a record closing high, ending the session above 42,000 for the first time. Heavyweight stocks that have enjoyed much of this year's stock market rally made fresh gains, with Tesla surging over 7%, and Apple and Meta Platforms each up almost 4%. AI powerhouse Nvidia jumped 4%, helping lift the PHLX semiconductor index surge 4.3%. Better-than-expected jobless claims data further stoked global risk appetite. On Wednesday, the Federal Reserve announced a rate cut at the high end of expectations, and said it had greater confidence inflation was under control. Fed Chair Jerome Powell said the U.S. economy remained strong and the central bank would decide on the appropriate pace of future rate cuts. "The Fed has sanctioned a pretty strong economic picture here, and so we're just seeing the money flow back into some of the sectors that have perhaps underperformed so far this quarter," said James Ragan, Director of Wealth Management Research at D.A. Davidson. The small-cap Russell 2000 index rose 2.1% as lower interest rates boosted prospects of reduced operating costs and greater profits. The S&P 500 climbed 1.70% to end the session at 5,713.64 points, its highest close ever. The Nasdaq gained 2.51% to 18,013.98 points, while the Dow Jones Industrial Average rose 1.26% to 42,025.19 points. Of the 11 S&P 500 sector indexes, eight rose, led by information technology, up 3.08%, followed by a 2.2% gain in consumer discretionary. In extended trade, Fedex dropped 10% after the company cut its revenue target for its fiscal year 2025. BofA Global Research said it now expects a total of 75 basis points in rate cuts by the end of this year, steeper than its previous forecast of 50 bps. Evercore ISI data going back to 1970 showed the S&P 500 has posted an average 14% gain in the six months following the first reduction of a rate-cutting cycle. September has generally been a disappointing month for U.S. equities with the S&P 500 notching an average loss of 1.2% since 1928. The S&P 500 banks index rose 2.5%, with gains in Citigroup and Bank of America after they lowered their respective prime rates. Fertility benefits management firm Progyny plunged 33% after a significant client notified the company it had elected to exercise a 90-day option to terminate its services agreement. Advancing issues outnumbered falling ones within the S&P 500 by a 2.4-to-one ratio. Across the U.S. stock market, advancing stocks outnumbered falling ones by a 3.8-to-one ratio. Volume on U.S. exchanges was relatively heavy, with 12.3 billion shares traded, exceeding the average of 10.8 billion shares over the previous 20 sessions. (Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru and by Noel Randewich in San Francisco; Editing by Nivedita Bhattacharjee, Maju Samuel and David Gregorio)

S&P 500 surges to record high close on euphoria over Fed rate cut

The S&P 500 hit a record high after the Federal Reserve cut interest rates by 50 basis points and hinted at more cuts. Major stocks like Tesla, Apple, and Nvidia saw significant gains. Better-than-expected jobless claims data also boosted market sentiment. The Nasdaq and Dow Jones also reached new highs.The S&P 500 surged to a record high close on Thursday, the day after the Federal Reserve cut interest rates by 50 basis points and indicated more rate cuts were on the horizon. Heavyweight stocks that have enjoyed much of this year's stock market rally made fresh gains, with Tesla surging over 7%, and Apple and Meta Platforms each up almost 4%. AI powerhouse Nvidia jumped 4%, helping lift the PHLX semiconductor index surge 4.3%. Better-than-expected jobless claims data further stoked global risk appetite. On Wednesday, the Federal Reserve announced a rate cut at the high end of expectations, and said it had greater confidence inflation was under control. Fed Chair Jerome Powell said the U.S. economy remained strong and the central bank would decide on the appropriate pace of future rate cuts. "The Fed has sanctioned a pretty strong economic picture here, and so we're just seeing the money flow back into some of the sectors that have perhaps underperformed so far this quarter," said James Ragan, Director of Wealth Management Research at D.A. Davidson. The small-cap Russell 2000 index rose 2.1% as lower interest rates boosted prospects of reduced operating costs and greater profits. The S&P 500 climbed 1.70% to end the session at 5,713.64 points, its highest close ever. The Nasdaq gained 2.51% to 18,013.98 points, while the Dow Jones Industrial Average rose 1.26% to 42,025.19 points, its highest close ever. Of the 11 S&P 500 sector indexes, eight rose, led by information technology, up 3.08%, followed by a 2.2% gain in consumer discretionary. In extended trade, Fedex dropped 10% after the company cut its revenue target for its fiscal year 2025. BofA Global Research said it now expects a total of 75 basis points in rate cuts by the end of this year, steeper than its previous forecast of 50 bps. Evercore ISI data going back to 1970 showed the S&P 500 has posted an average 14% gain in the six months following the first reduction of a rate-cutting cycle. September has generally been a disappointing month for U.S. equities with the S&P 500 notching an average loss of 1.2% since 1928. The S&P 500 banks index rose 2.5%, with gains in Citigroup and Bank of America after they lowered their respective prime rates. Fertility benefits management firm Progyny plunged 33% after a significant client notified the company it had elected to exercise a 90-day option to terminate its services agreement. Advancing issues outnumbered falling ones within the S&P 500 by a 2.4-to-one ratio. Across the U.S. stock market, advancing stocks outnumbered falling ones by a 3.8-to-one ratio. Volume on U.S. exchanges was relatively heavy, with 12.3 billion shares traded, exceeding the average of 10.8 billion shares over the previous 20 sessions.

S&P 500 hits record high buoyed by economic hopes: Markets wrap

Wall Street traders are optimistic about the Federal Reserve's ability to achieve a soft landing, leading to a rally in riskier markets. The S&P 500 hit its 39th record high in 2024, with tech stocks leading gains. The Fed's recent rate cut has bolstered hopes of avoiding a recession.Wall Street traders betting the Federal Reserve will be able to engineer a soft landing spurred a rally in riskier corners of the market, with stocks hitting all-time highs. The S&P 500 climbed 1.7% -- notching its 39th record in 2024 and extending this year's surge to about 20%. Tech led gains, while defensive industries underperformed. The Nasdaq 100 added 2.6% and the Russell 2000 of small caps rose 2.1%. In late hours, FedEx Corp. tumbled on a bearish outlook. Nike Inc. surged after saying longtime executive Elliott Hill is coming out of retirement to replace John Donahoe as chief executive officer. While a relative sense of calm prevailed, traders also braced for a quarterly episode known as "triple witching" in which derivatives contracts tied to stocks, index options and futures will mature -- potentially amplifying market moves. About $5.1 trillion are set to expire Friday, according to an estimate from Asym 500. The options expiry coincides with the rebalancing of benchmark indexes. The Fed's bold start to cutting interest rates and its determination not to fall behind the curve re-ignited hopes the central bank will be able to avoid a recession. Data Thursday showing a slide in jobless claims to the lowest since May signaled the labor market remains healthy despite a slowdown in hiring. "Despite some volatility after the Fed's rate cut, the S&P 500's bullish trend remains intact," said Fawad Razaqzada at City Index and Forex.com. "The Fed's decision to deliver a 50-basis point rate cut was largely welcomed by investors. The move was seen as a bold but necessary step to ease economic concerns without sending panic signals reminiscent of the 2008 financial crisis." The S&P 500 topped 5,700. The Dow Jones Industrial Average finished above 42,000. Wall Street's favorite volatility gauge -- the VIX -- sank to around 16. Treasuries were mixed, with shorter-maturities outperforming longer ones. The dollar fell. The pound rose as the Bank of England held rates steady and said it won't rush to ease policy. The yen dropped ahead of the Bank of Japan policy decision. Bitcoin jumped 5%. Equities tend to respond positively to falling policy rates over the next year if a recession is avoided, according to Keith Lerner at Truist Advisory Services Inc. There have been six rate cutting cycles for the Fed since 1989 and stocks have been up a year later in four of six instances, he noted. Looking a bit more granularly, US large caps have outperformed small caps in the year following the first rate cut in four of the previous six instances. Small caps outperformed, counterintuitively, into the 2001 and 2008 recessions. "On a short-term basis, small-cap stocks may see a greater boost from rate cuts given these companies generally have a greater proportion of floating rate debt relative to large caps," he said. "However, small-cap earnings trends are still lagging, and a cooling economy is historically a headwind for the asset class. Thus, we still prefer large caps longer term." On a forward price-to-sales measure, the Russell 2000 is trading at the steepest discount to S&P 500 in more than 20 years. "Historically, equity markets have performed well in periods when the Fed was cutting rates while the US economy was not in recession. We expect this time to be no exception," said Solita Marcelli at UBS Global Wealth Management. "Our base case remains for the S&P 500 to reach 5,900 by year-end and advance to 6,200 by June 2025." Marcelli says she believes equity gains will broaden out, with continued potential for growth stocks, particularly in the technology sector, to rise further. "Within tech, we expect AI to be a key driver of equity market returns over the coming years and recommend strategic exposure to this theme," she said. "Investors may use tech sector volatility, which could rise in the months ahead on cyclical and geopolitical risks, to build up long-term exposure to AI at more favorable prices." Meantime, the latest MLIV Pulse survey showed that 57% of the 173 respondents believe a rotation into value stocks is likely to accelerate now that the Fed started the easing cycle. The majority of survey participants, 75%, expect the US to manage a soft landing after the 50 basis-point rate cut, but even those favor value over AI stocks, according to the poll conducted immediately after the decision. Value was especially popular among those expecting the US to hit a recession.