The increases are led by the financial sector, followed by the utilities sector and the cyclical consumer sector. For their part, technology companies rose 0.8% overall, with Tesla (+2.1%) and Nvidia (+1.8%) standing out.
The Dow Jones Industrial advances 0.5%, the Nasdaq Composite increases 0.7% and the S&P 500 increases 0.5%. The Federal Reserve indicated it may make fewer interest rate cuts next year than had been anticipated.
Despite recent volatility, indices remain near their record levels, and The S&P 500 remains on track to record one of the best years of the millennium. Wednesday’s drop somewhat dampened enthusiasm in the market, which was already criticized for being too optimistic and depending on everything going perfectly to justify its high prices.
Traders now expect the Federal Reserve to make just one or, at most, two interest rate cuts in 2025, according to CME Group data. A month ago, most were betting on at least two cuts as a safe scenario.
Fed Chair Jerome Powell warned Wednesday that a still resilient economy and inflationary pressures could lead the central bank to cut interest rates more slowly next year. This represents a change from the accelerated pace of cuts from a two-decade high reached in September.
Wall Street loves lower interest rates because they stimulate the economy and increase investment prices, although they can also fuel inflation. This year, the S&P 500 had already hit record highs 57 times on expectations that the Fed would continue cutting rates in 2025.
The bond market
In the bond market, yields were mixed after soaring Wednesday on expectations that the Fed will make fewer rate cuts in 2025 than expected a few months ago.
A report showed that the US economy grew at an annualized rate of 3.1% over the summer, faster than had been estimated. The economy has shown remarkable resilience, even though the Fed kept its main interest rate at a two-decade high before beginning to cut it in September.
Another report indicated that fewer American workers filed for unemployment benefits last week, reflecting a strong labor market. However, a third report noted that manufacturing in the mid-Atlantic region unexpectedly contracted again, despite expectations for growth.
The yield on the 10-year Treasury note rose to 4.54% from 4.52% on Wednesday and from less than 4.20% earlier this month. On the other hand, the two-year yield, which more closely tracks expectations for immediate Fed action, fell to 4.31% from 4.35%.
Rising long-term yields have put pressure on the housing market by keeping mortgage rates elevated. Lennar, a home builder, fell 4.1% after reporting weaker-than-expected quarterly earnings and revenue.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
