Thursday witnessed a remarkable surge in US stocks, as investors grew optimistic about a possible conclusion to the Federal Reserve’s string of economically burdensome interest rate hikes. The Dow ascended by 565 points, equivalent to a 1.7% increase, while the S&P 500 and the Nasdaq Composite also soared by 1.9% and 1.8%, respectively.
This week, both the S&P 500 and the Dow are poised to achieve their most substantial weekly gains of the year, with the Dow registering its most prosperous day since June. The Treasury yields, which had recently surpassed 5%, exhibited a significant decline. Notably, the 10-year Treasury yield plummeted by approximately 0.12% on Thursday, resting at 4.66%.
The positive market sentiment persisted following the Federal Reserve’s decision to maintain interest rates for the second consecutive time, coupled with Federal Reserve Chair Jerome Powell’s satisfaction with the downward trajectory of inflation. Consequently, the Dow experienced an increase of more than 220 points on Wednesday.
The prevailing optimism was evident in the CME FedWatch tool, which indicated that 85.5% of investors were anticipating the Fed to uphold the current rates during its upcoming meeting in December. Louis Navellier of Navellier & Associates emphasized the continuing year-end rally and the significant decline in interest rates, stating, “The year-end rally continues as interest rates plummet.”
Despite a somewhat underwhelming earnings season and numerous downward adjustments in fourth-quarter estimates, the market demonstrated resilience, seemingly unfazed by potentially challenging geopolitical risks.
Fresh data released on Thursday highlighted a downward trend in prices and a possible easing of the robust labor market. According to the Labor Department, labor costs unexpectedly declined by 0.8% in the last quarter, while first-time claims for jobless benefits experienced a consecutive weekly increase. The week concluding on October 28 recorded 217,000 initial claims for unemployment insurance, marking a 5,000 claim upsurge from the revised previous week’s total.
As the market eagerly awaits Friday’s job report, projecting substantial employment growth, all eyes remain on the performance of corporate giants such as Apple, set to announce its third-quarter results post-market closure. Shares of the tech giant observed a 2.1% increase ahead of the disclosure.
Tech stocks played a significant role in propelling the market forward on Thursday, with Tesla witnessing an impressive 6.3% surge, and Nvidia following suit with a 2.8% uptick. Meanwhile, Starbucks experienced a notable 9.5% spike, attributed to the company surpassing earnings estimates and achieving record revenue.
While all 11 sectors of the S&P 500 were on an upward trajectory, certain exceptions were observed. Meta‘s shares faced a minor setback, sliding by 0.3%. The parent company of Facebook recently announced its decision to impose a fee on European users of Instagram and Facebook for ad-free viewing, effective from November.
Conversely, Airbnb’s shares witnessed a 3.3% decline, despite the company surpassing third-quarter revenue expectations. The downward trend was compounded by a downward revision of the company’s forward guidance.
