Wall Street ends higher as rate-cut fever lingers; Dow Jones up over 250 points
Broad-based gains boosted all three major U.S. stock indexes and nudged the S&P 500 to within one percentage point of its all-time closing high reached in January 2022
- Dec 20, 2023,
- Updated Dec 20, 2023 6:51 AM IST
Wall Street extended its rally on Tuesday, 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 U.S. 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 Tuesday and has surged over 11% in December so far.
"It’s Fed fumes," said 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 Wednesday, the Federal Open Market Committee signaled 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 Tuesday there was "no urgency" to begin cutting rates, given the strength of the economy and the slow rate at which inflation is cooling down toward the central bank's 2% annual target.
Even so, at last glance, financial markets are pricing in a 67.5% 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," 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% to more than a 1-1/2 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 Thursday, to be followed by its broad-ranging Personal Consumption Expenditures (PCE) report on Friday, 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%, to end at 4,768.44 points, while the Nasdaq Composite gained 97.86 points, or 0.66%, to 15,003.06. The Dow Jones Industrial Average rose 250.03 points, or 0.67%, 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 U.S. court ruling in favor 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".
Wall Street extended its rally on Tuesday, 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 U.S. 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 Tuesday and has surged over 11% in December so far.
"It’s Fed fumes," said 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 Wednesday, the Federal Open Market Committee signaled 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 Tuesday there was "no urgency" to begin cutting rates, given the strength of the economy and the slow rate at which inflation is cooling down toward the central bank's 2% annual target.
Even so, at last glance, financial markets are pricing in a 67.5% 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," 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% to more than a 1-1/2 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 Thursday, to be followed by its broad-ranging Personal Consumption Expenditures (PCE) report on Friday, 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%, to end at 4,768.44 points, while the Nasdaq Composite gained 97.86 points, or 0.66%, to 15,003.06. The Dow Jones Industrial Average rose 250.03 points, or 0.67%, 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 U.S. court ruling in favor 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".