Stocks surged Thursday trading, with the both the Dow and the S&P 500 closing at fresh record highs, following a big rate cut from the Federal Reserve and forecasts that suggest a soft landing for the world's biggest economy.
The Dow Jones Industrial Average soared 522.09 points, or 1.26%, to finish the session at 42,025.19 and topping 42,000 for the first time, while the S&P 500 gained 1.70% to close at 5,713.64 and the tech-heavy Nasdaq advanced 2.51% to end the day at 18,013.98.
"While we all can debate the warranted speed of rate cuts out of the gate, the reality is the direction of travel for policy rates is lower and getting to a more neutral stance on rates should arguably be the finish line of this race," said Charlie Ripley, senior investment strategist for Allianz Investment Management.
"The track record from this Fed has shown they haven’t historically been the fastest out of the gate, but they have exhibited the ability to dial up the pace when deemed necessary," he added.
Ripley said that with a better assessment on how the Fed is going to run the rate cutting race, "investors can focus on the bigger obstacle on the horizon, the upcoming US election."
Updated at 2:02 PM EDT
Rally on ...
With Treasury yields steady after a morning of extended gains, stocks are moving higher into the final hours of trading, with the S&P 500 last marked 1.9% higher on the session at 5,724.8 points.
The Dow, meanwhile, was marked 553 points, or 1.33% higher with the Nasdaq up 2.9%, or 504 points.
Benchmark 10-year note yields were last trading at 3.743% with 2-year paper pegged at 3.601%
$SPX weekly targets/resistance...trailing up stops since we're getting near resistance and we have timing cycles pic.twitter.com/sf62SVeXX0
— Carolyn Boroden (@QueenOfFibs) September 19, 2024
Updated at 12:47 PM EDT
Party like its 1995
Analysts at BMO Capital Markets boosted their year-end target for the S&P 500 to 6,100, the highest on Wall Street and a level that suggests a near 7% gain from current levels.
BMO's chief investment strategist, Brian Belski, said he and his team "continue to be surprised by the strength of market gains", adding that a "stronger-than-normal 4Q is likely in store (and)a soft landing is the most likely economic scenario."
Belski said that makes the current environment most "comparable to the mid-1990s – a period where the index was able to sustain a greater-than-20x multiple for several years."
Related: Stocks set for big Fed boost after summer rate cut rethink
Updated at 10:40 AM EDT
More round numbers
The Nasdaq reclaimed the 18,000 point mark for the first time in more than a month Thursday, with the tech-focused benchmark rising 483 points, or 2.75% in mid-morning trading.
The Dow, meanwhile, is holding gains over the 42,000 point mark and was last trading 1.23% higher on the session, with the S&P 500 last up 99 points, or 1.7%, and trading north of 5,700 points.
The Dow just crossed above 42,000 for the first time, its 5th 1,000-point milestone of the year. $DJIAhttps://t.co/rQuXrxVpWs pic.twitter.com/9iL0sNzDdU
— Charlie Bilello (@charliebilello) September 19, 2024
Updated at 10:10 AM EDT
Solid, but not spectacular
Existing home sales were modestly weaker-than-expected last month, but the annual rate of 3.86 million units, published Thursday by the National Association of Realtors, wasn't far off Wall Street forecasts and suggests that further declines in mortgage rates might give the moribund housing market a much-need boost.
Existing Home Sales MoM in the United States decreased to -2.50 percent in August from 1.50 percent in July of 2024.https://t.co/enTCGmSnrb pic.twitter.com/HjMLzRxbHT
— TRADING ECONOMICS (@tEconomics) September 19, 2024
Updated at 9:37 AM EDT
Record open
The S&P 500 was marked 88 points, or 1.58% higher in the opening minutes of trading, passing the 5,700 point mark for the first time on record, with the Nasdaq rising 386 points, or 2.2%.
The Dow crossed the 42,000 point mark with a 550 point gain while the mid-cap Russell 2000 gained 44 points, or 2.01%.
S&P 500 Opening Bell Heatmap (Sept. 19, 2024)$SPY +1.59%🟩$QQQ +2.28%🟩$DJI +1.29%🟩$IWM +1.94%🟩 pic.twitter.com/fIrnmrYFvQ
— Wall St Engine (@wallstengine) September 19, 2024
Updated at 8:35 AM EDT
Nice work if you can get it
Weekly jobless claims continued to surprise investors Thursday, with new applications for jobless benefits falling by 12,000 to 219,000 over the period ending on September 14.
The longer-term continued claims tally, which is a week in arrears, was trimmed to 1.829 million, the lowest in three months, while the four-week average slipped to 227,500 from 231,000.
Benchmark Treasury bond yields moved higher in the wake of the data, with 10-year notes rising to 3.747% and 2-year notes trading at 3.611%.
Stock futures, meanwhile, held onto earlier gains, with the S&P 500 called 90 points higher and the Nasdaq priced for a 426 points gain.
Continuing Claims lowest in 3 months pic.twitter.com/FCHO8udgkA
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) September 19, 2024
Updated at 7:04 AM EDT
Bank of England
The Bank of England held its key Bank Rate steady at 5% following its regular policy meeting in London, while cautioning on the risks of cutting "too fast or by too much" in an economy that is still feeling elevated inflation pressures.
The 8-1 decision, which markets widely expected, had little impact on the pound, which was last marked 0.188% higher against the U.S. dollar at 1.3307.
The Monetary Policy Committee voted by a majority of 8-1 to maintain #BankRate at 5%. Find out more: https://t.co/gtDedxNasg pic.twitter.com/hEv9kiIuDl
— Bank of England (@bankofengland) September 19, 2024
Stock Market Today
The Fed's first rate cut in more than four years, which lowered its key lending rate by half a percentage point to between 4.75% and 5%, ended one of the longest stretches of no policy change on record last night.
Chairman Jerome Powell noted confidence in the inflation outlook and concerns tied to the job market. Powell insisted that the economy was in "good shape" despite some labor-market cooling.
He hinted that Wednesday's rate cut and the two more reductions forecast in the Fed's Summary of Economic projections, would enable a so-called soft landing, which tames inflation without inducing recession.
"We’re committed to maintaining our economy’s strength by supporting maximum employment and returning inflation to our 2% goal," Powell told reporters in Washington.
"If you look at the growth in economic activity data — the retail-sales data that we just got, second-quarter GDP — all of this indicates an economy that is still growing at a solid pace, so that should also support the labor market over time," he added.
The outsized cut, while anticipated by Wall Street, still caught some corners of the market by surprise, with Treasury bond yields nudging higher amid concern that the Fed's efforts to support growth could reinflate an already solid economy.
Related: Fed delivers on big rate cut, signals focus on cooling job market
Benchmark 2-year-note yields were last marked 4 basis points higher than their predecision levels at 3.579% in overnight trading, while 10-year-note yields were pegged at 3.692%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was last marked 0.02% at 100.565.
“The Fed took a bold step, considering that services inflation is still much higher than average and that the US economy depends on China to continue deflating goods," said George Lagarias, chief economist at London-based Forvis Mazars. "A 'double cut' necessitates further aggressive moves, and leaves little room to maneuver in case prices rebound.”
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Wall Street's reaction, however, looks far more straightforward, with the Fed committed to aggressive policy easing, the economy growing at a 2.9% clip according to the Atlanta Fed's GDPNow tracker, and corporate earnings forecast to rise both into the end of the year and over the whole of 2025.
The S&P 500 is likely to open at a record high Thursday, with futures contracts tied to the benchmark indicating an opening bell gain of around 84 points.
Futures tied to the Dow Jones Industrial Average, meanwhile, are priced for a 455 point advance with the tech-focused Nasdaq called 388 points to the upside.
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In overseas markets, Britain's FTSE 100 was marked 1.16% higher in London ahead of the Bank of England's September rate decision, expected at 7 a.m. U.S. Eastern Time. The regional Stoxx 600 benchmark rose 1.08% in Frankfurt.
Overnight in Asia, the Nikkei 225 closed at a two-week high after rising 2.13% on the session, ahead of tomorrow's Bank of Japan rate decision.
The regionwide MSCI ex-Japan index, meanwhile, was marked 1.24% higher into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
