Wall Street’s primary indices rose on Thursday following the Federal Reserve’s decision to hold interest rates on hold, easing concerns about potential rate hikes. Attention now turns to the upcoming labor report, which is expected to provide crucial information on the labor market and future interest rate trajectories.
Federal Reserve Chairman Jerome Powell’s remarks indicating a postponement of planned rate cuts due to persistent inflation contributed to market optimism. Despite inflationary pressures, Powell dismissed discussions of rate hikes, further boosting investor confidence.
Market sentiment reflects increased anticipation of rate cuts, with money markets pricing in a 58% chance of a September rate cut and a 68.4% higher chance of a November cut, according to the CME FedWatch tool.
Brian Nick, senior investment strategist at the Macro Institute, said: “The outcome of the Fed’s statement, plus the press conference, resulted in slightly more rate cuts being priced in, although not necessarily sooner, but by the end of the year.”
While Wednesday initially saw a surge in U.S. stocks following the Federal Reserve’s decision, both the S&P 500 and Nasdaq closed lower for the day.
The labor market remains strong and new claims for unemployment benefits remain stable at a low level. Additionally, new orders for manufactured goods in the United States increased in March in line with economists’ expectations.
Investors’ attention is now focused on upcoming nonfarm payrolls data, which is expected to provide greater clarity on the path of the labor market and its impact on interest rates.
Among S&P 500 companies reporting earnings, a notable 77.4% have beaten estimates, surpassing the historical average of 67%, according to LSEG data.
As of 10:01 a.m. ET, the Dow Jones Industrial Average rose 69.56 points, the S&P 500 gained 5.60 points, and the Nasdaq Composite gained 51.79 points.
Top gainers included Apple, Qualcomm, Carvana and MGM Resorts, while DoorDash and Etsy faced declines.
The issues that rose exceeded those that fell on both the New York Stock Exchange and the Nasdaq, with new highs recorded for the S&P 500 and Nasdaq indices.
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