S&P 500 surges to record high close on euphoria over Fed rate cut
Dow also posts record closing high
BofA expects Fed to go for 75-bp cut in Q4
US big banks rise after Fed's rate cut
Updates to close
By Noel Randewich and Purvi Agarwal
Sept 19 (Reuters) -The S&P 500 surged to a record high closeon 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 TSLA.O, Apple AAPL.O and Meta Platforms META.O up sharply.
AI powerhouse Nvidia NVDA.O rallied, helping lift the PHLX semiconductor index .SOX.
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 .RUT roseas lower interest rates boosted prospects of reduced operating costs and greater profits.
According to preliminary data, the S&P 500 .SPX gained 94.95 points, or 1.69%, to end at 5,713.21 points, while the Nasdaq Composite .IXIC gained 440.68 points, or 2.49%, to 18,011.51. The Dow Jones Industrial Average .DJI rose 526.98 points, or 1.27%, to 42,028.54.
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 .SPXBK rose, with gains in Citigroup C.N and Bank of America BAC.N after they lowered their respective prime rates.
Fertility benefits management firm Progyny PGNY.O plunged after a significant client notified the company it had elected to exercise a 90-day option to terminate its services agreement.
US inflation and interest rates https://reut.rs/4esuPHd
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
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
