S&P 500 and Nasdaq reach intraday records as rate-cutting hopes overshadow shutdown fears
S&P 500 and Nasdaq both hit intraday records at the market opening on Thursday. This was due to renewed expectations of interest rate reductions. Traders are bracing for a week-end with little data, but few new catalysts.
Investors have been able to ignore the uncertainty of the U.S. Government Shutdown because they are anchored to a Federal Reserve that is dovish.
The labor market is at the core of the Fed’s policy outlook, and it's a crucial part of its dual mandate. Investors are increasingly relying on alternative data sources as the government shutdown has created a data vacuum.
Art Hogan is the chief market strategist for B. Riley Wealth. He said, "I believe they will consider the fact that there's a weak trend in the job market, which they are trying to defend at this time."
At 9:54 a.m. The Dow Jones Industrial Average gained 118.27, or 0.25 percent, to 46.559.37. The S&P 500 rose 8.65, or 0.13 percent, to 6,719.85. And the Nasdaq Composite advanced 56.62, or 0.25 percent, to 22.811.78.
In the morning session, both the S&P 500 and Nasdaq Composite Indexes reached their intraday records of 6,731.94 y 22,900.60 respectively.
S&P 500 was boosted by the tech sector's 0.3% increase. Nvidia rose by 0.8% while Broadcom, Advanced Micro Devices, and Broadcom were all up.
The Nasdaq was boosted by the stocks, which catapulted a broader semiconductor index into a new record high.
A report that Intel was in talks with Advanced Micro Devices to become a customer of their foundry prompted the stock price of Advanced Micro Devices to rise.
The Industrials sector grew 0.4% in the S&P 500. Caterpillar reached a new record and was the last to rise 2.4%.
Consumer discretionary stocks declined 0.2%. Tesla reversed its early gains and fell 0.5%, despite reporting that third-quarter deliveries exceeded analysts' expectations.
A report by global outplacement firm Challenger, Gray & Christmas shows that employers in the United States announced fewer layoffs during September, but their hiring plans for this year are at their lowest level since 2009. The report came just a day following the ADP National Employment Report, which was weaker than expected on Wednesday.
These reports fill the gap left behind by the weekly unemployment claims report. This is a key indicator of labor market strength, and on Thursday, it became the first data victim of the shutdown.
The recent data has been interpreted by traders as being enough to force the Federal Reserve towards a rate cut of 25 basis points at its next policy meeting.
Hogan stated that the Fed would be more inclined to reduce rates the longer the shutdown continues.
Equifax and TransUnion, two credit bureaus, fell by 8.4% and 11.44% respectively after FICO launched its program, which could give mortgage lenders access to credit scores, without having to rely on bureaus. FICO surged by 30.1%, topping the benchmark index.
Occidental Petroleum announced that it will sell its petrochemicals division to Warren Buffett’s Berkshire Hathaway, for $9.7 Billion. Shares in the oil and gas company fell by 4.2%.
On the NYSE, advancing issues outnumbered declining ones by a ratio of 1.3 to 1, and by a ratio of 1.31 to 1 on the Nasdaq.
The S&P 500 recorded 26 new 52-week lows, while the Nasdaq Composite posted 90 new highs, and 38 new lowers. (Reporting and editing by Krishna Chandra Eluri in Bengaluru, Sukriti Gupta from Bengaluru)
(source: Reuters)
