Wall Street rises, interest rates cut expected in final period of 2023 By Reuters
© Reuters. FILE PHOTO: Traders work on the New York Stock Exchange (NYSE), USA, December 11, 2023. REUTERS/Brendan McDermid/File Photo
Stephen Culp
NEW YORK (Reuters) – U.S. stocks rose on Tuesday, extending eight weeks of gains in the final week of the year on expectations the Federal Reserve will cut interest rates as early as March.
All three major U.S. stock indices were in positive territory in light trading, with interest rate-sensitive large-cap and chip stocks leading the upward momentum.
All three are achieving monthly, quarterly and annual profits.
On Friday, the three indexes recorded their eighth straight week of gains. That’s economic data showing inflation is approaching the Fed’s average annual target of 2%.
“It’s going to be a fairly quiet trading session. Momentum remains bullish, but I don’t think we’ll see volume strong enough to engage in a strong rally,” said Peter Cardillo. Chief Market Economist at Spartan Capital Securities in New York.
“We had some good inflation numbers on Friday. If inflation continues to fall in January and February, the Fed is likely to cut rates earlier than expected.”
This would mark the company’s biggest quarterly profit in three years and within 0.5% of the all-time high achieved in January 2022.
A close above this level (4,796.56) would confirm that the benchmark index is in a bull market after touching a bear market low reached in October 2022.
An eight-week rally in stocks has turned into overdrive since the Federal Reserve signaled the end of its rate hike cycle two weeks ago and opened the door to the possibility of a rate cut in 2024.
At a glance, the market has a 72.7% chance of a 25 basis point cut in the Fed funds target rate in March, according to CME’s FedWatch tool.
At 2:10 PM ET, the S&P 500 was trading up 152.85 points, or 0.41%, at 37,538.82, while the S&P 500 was trading up 18.88 points, or 0.40%, at 4,773.51 and 66.63 points, or 0.44%, at 15,059.61.
All 11 major sectors in the S&P 500 were green.
Energy stocks recorded the highest rise of over 3% thanks to a surge in oil prices as supply concerns heightened due to the Middle East conflict, and optimism about the Federal Reserve’s interest rate cut boosted demand expectations.
Manchester United (NYSE:) shares rose 2.9% after billionaire Jim Ratcliffe struck a deal to buy a 25% stake in the soccer club for $33 a share.
Gracell Biotechnologies rose 60.3% after AstraZeneca (NASDAQ:) announced it would acquire the China-based company for up to $1.2 billion.
Intel Corporation (NASDAQ:) rose 4.7% after the Israeli government agreed to provide $3.2 billion in subsidies for a $25 billion factory the chipmaker plans to build in southern Israel.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of 3.68:1. On Nasdaq, a 2.23-to-1 ratio favored advancing stocks.
The S&P 500 recorded 41 new 52-week highs and no new lows. The Nasdaq Composite recorded 186 new highs and 38 new lows.
