Wall Street’s main indexes rose on Thursday, with the tech giant Apple notching a record high, a day after the Federal Reserve hinted at an end to its aggressive rate hike campaign and signaled that borrowing costs would be lower next year.
The Fed left interest rates unchanged on Wednesday, as expected, with the chair, Jerome Powell, saying the historic tightening of monetary policy was probably over, as inflation falls faster than expected, and discussions on cuts in borrowing costs were coming “into view”.
The Fed has raised its policy rate by a market-punishing 525 basis points since March 2022 in an effort to curb decades-high inflation. On Wednesday, 17 of 19 Fed officials projected the policy rate would be lower by end-2024.
The dovish pivot in the central bank’s statement triggered a rally in equities, with the Dow Jones Industrial Average Index clocking fresh intra-day record highs on Thursday.
“Investors are feeling pretty bullish in terms of having three rate cuts penciled in for next year, which is a little bit more than the bears were expecting,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
Money markets now see an 83.3% chance of at least a 25 basis point rate cut in March 2024, up from about 50% before the policy decision, while almost fully pricing in another cut in May, according to CME Group’s FedWatch tool.
Investors also parsed retail sales data for November, which rose 0.3% on a monthly basis compared with estimates of a 0.1% fall, according to economists polled by Reuters.
Another report showed weekly jobless claims stood at 202,000 for the week ended 9 December, lower than the estimated 220,000.
Meanwhile, Apple’s shares added 0.7%, rising to an intra-day record high of $199.62, surpassing its July peak.
At 9.42am ET, the Dow Jones Industrial Average was up 35.43 points, or 0.10%, at 37,125.67, the S&P 500 was up 21.56 points, or 0.46%, at 4,728.65, and the Nasdaq Composite was up 92.21 points, or 0.63%, at 14,826.17.
Ten of the S&P 500’s top 11 sectors advanced, led by a 2.3% rise in real estate stocks, while the small-caps Russell 2000 index surged 2.9% to its strongest level since early February.
