Nov 28 (The Street Press) – Wall Street’s main indicators turned positive on Tuesday following encouraging remarks from Federal Reserve officials. Board Governor Christopher Waller suggested that interest rates might decrease in the coming months if inflation keeps decreasing. Additionally, Chicago Fed President Austan Goolsbee noted a significant slowdown in overall inflation, comparable to levels not witnessed since the 1950s.
Expectations for a 25-basis point rate cut in May 2024 increased to nearly 63%, up from around 50% prior to central bank officials’ comments, according to the CME Group’s FedWatch Tool.
All three major indexes were set for monthly gains, breaking a three-month streak of losses, fueled by optimism about the potential rate cut. The market rebound has also positioned the S&P 500 (.SPX) very close to its intra-day high for 2023.
Commenting on the Federal Reserve’s statements, Rick Meckler, partner at Cherry Lane Investments, noted, “The (Fed) comments are refocusing investors on the idea that the inflation rate is coming down and as the inflation rate comes down, they’re hopeful that it’ll bring rates down, and ultimately bring the market higher.”
Board Governor Michelle Bowman suggested that the central bank may need to increase borrowing costs to achieve its goal of lowering inflation to the 2% target, potentially limiting additional market gains.
Upcoming data, including the Personal Consumption Expenditure (PCE) data, the Fed’s favored inflation measure, and the “Beige Book,” providing a snapshot of the U.S. economy, expected later this week, will likely reveal how the economy is performing amid tighter monetary conditions.
As of 11:39 a.m. ET, the Dow Jones Industrial Average rose by 174.29 points, or 0.49%, reaching 35,507.76. The S&P 500 increased by 16.54 points, or 0.36%, to 4,566.97, while the Nasdaq Composite gained 59.27 points, or 0.42%, reaching 14,300.29.
Ten of the 11 major S&P 500 sectors showed positive momentum, with utility stocks leading gains, up by 0.8%.
Market sentiment was further boosted by data indicating a growth in U.S. consumer confidence in November, following three consecutive monthly declines.
Boeing gained 2.3% following an upgrade by RBC Capital Markets to “outperform” from “sector perform,” accompanied by a Street-high price target.
U.S.-listed shares of PDD Holdings surged 17.6% after the Chinese e-commerce company exceeded third-quarter revenue expectations.
Affirm Holdings continued its positive momentum, adding 5.9%, building on Monday’s gains. Jefferies upgraded the payments platform, and data indicated an increase in price-conscious shoppers turning to buy now, pay later services during Cyber Monday.
Micron Technology experienced a 2.4% decline as the chip firm anticipated higher first-quarter operating expenses compared to its previous estimates.
On the NYSE, advancing issues surpassed decliners with a ratio of 1.74-to-1, and on the Nasdaq, the ratio was 1.18-to-1.
The S&P index marked 19 new 52-week highs and one new low, while the Nasdaq showed 55 new highs and 81 new lows.