Written by Johan M. Cherian and Purvi Agarwal
(Reuters) – The blue-chip Dow rose to a new intraday high on Friday as a positive inflation report paves the way for the Federal Reserve to continue easing interest rates while focusing on strengthening the labor market. Small-cap stocks outperformed as the market opened.
Consumer spending rose modestly in August, a Commerce Department report said, suggesting the economy maintained some of its solid momentum in the third quarter while inflationary pressures continued to ease.
As of 11:50 a.m. ET, the stock was up 410.80 points (0.97%) to 42,585.91, up 2.69 points (0.05%) to 5,748.00, and down 61.33 points (0.34%) to 18,128.96. .
The index, which measures small-cap stocks that have fared well in a low interest rate environment, rose 1.5% to a one-week high.
Ten of the S&P 500's 11 sectors rose, led by a 2% rise in energy stocks, while technology stocks fell 1%.
Nasdaq constituents like Nvidia (NASDAQ:) and Microsoft (NASDAQ:) fell 2.7% and 0.5%, respectively, as investors focused on other sectors.
Financial stocks such as Goldman Sachs and health care stocks such as UnitedHealth (NYSE:) were the biggest boosters for the Dow.
Investors currently slightly support a deep 50 basis point rate cut at the next Fed meeting, with a 52.1% probability, up from a coin toss before the data, according to CME Group's (NASDAQ:) FedWatch tool. There is.
Cooling price pressures gave the Fed plenty of room to begin its policy easing cycle with a 50bps rate cut last week. The focus now shifts to a number of labor market reports to be released next week.
John Luke Tyner: “The market is just expecting more rate cuts. The Fed may accelerate this rate cut cycle, but unless we get bad data like a negative jobs report or a spike in unemployment, “We may not be able to cut rates by another 50 bps.” , Portfolio Manager at Aptus Capital Advisors.
Meanwhile, the University of Michigan's final estimate of consumer sentiment for September was 70.1, compared to a Reuters poll of economists' estimate of 69.3.
Markets will analyze Fed Director Michelle Bowman's comments later in the day.
Federal Reserve President Lisa Cook said late Thursday that the central bank's unusual actions earlier this month could address growing “downside risks” to employment.
Wall Street's major indexes ended the session higher, with the S&P 500 closing at a record high. All three indexes have been on an upward trend for three consecutive weeks.
Among other stocks, Bristol-Myers Squibb (NYSE:) soared 3.2% after the U.S. Food and Drug Administration approved a drug to treat schizophrenia.
Costco Wholesale (NASDAQ:) fell 1.7% after weak fourth-quarter sales.
U.S.-listed stocks of Chinese companies such as alibaba (NYSE:) rose 2.8%, PDD Holdings rose 4.4% and NetEase (NASDAQ:) rose 3% as China's central bank cut interest rates and injected liquidity into the banking system.
The optimism spread to mining companies such as Arcadium (N:), which rose 3.5%, and BHP's U.S.-listed shares rose 1.8%.
Advancing issues outnumbered declining issues on the New York Stock Exchange by a 3.39-to-1 ratio and 2.37-to-1 on the Nasdaq.
The S&P 500 recorded 39 new highs and no new lows in 52 weeks, while the Nasdaq Composite Index recorded 61 new highs and 48 new lows.
