US STOCKS-S&P 500 surges to record high close on euphoria over Fed rate cut
19/09/2024 21:00
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Dow also posts record closing high
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BofA expects Fed to go for 75-bp cut in Q4
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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
close on 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 rose as 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.
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US inflation and interest rates https://reut.rs/4esuPHd
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(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)
((noel.randewich@thomsonreuters.com;))