On Thursday, Wall Street experienced upward momentum following a significant rally the day before, fueled by optimism about potential interest rate cuts in the coming year. The S&P 500 rose by 0.6%, nearing its all-time high, while the Dow Jones Industrial Average gained 171 points, reaching record levels for the second consecutive day.
The Nasdaq composite also increased by 0.5%. Moderna saw an 11.6% surge after positive data from a melanoma treatment study, counterbalancing a 5.5% decline for Adobe due to a revenue forecast miss.
The stock market has been on an upward trajectory since October, driven by expectations of reduced inflation, prompting optimism that the Federal Reserve may halt interest rate hikes and potentially consider cuts. Wednesday’s Fed announcement of holding interest rates steady and anticipating a rate decline next year further fueled market optimism.
The European Central Bank and Bank of England, though keeping rates unchanged, hinted at potential future cuts.
Treasury yields declined as traders anticipated multiple U.S. rate cuts in 2024. The 10-year Treasury yield fell to 3.91% from 4.03%, contributing to a significant boost in the stock market since October. Real estate and bank stocks surged, with lower interest rates benefiting these sectors. Despite the recent rally, uncertainty remains as the Fed aims to balance economic slowing and inflation control, posing potential challenges.
Reports indicating a robust U.S. economy, including increased retail spending in November and fewer jobless benefit applications, slightly reversed Treasury yield declines. Traders, however, continue to bet on substantial rate cuts in 2024, prompting caution from some investors who believe the market may be pricing rate cuts too aggressively.
While momentum is building, concerns persist about the Fed’s ability to navigate interest rate policies effectively. International markets showed mixed results, with European indexes rallying, while Japan’s Nikkei 225 declined due to a weakened dollar against the yen.
