(Bloomberg) — Wall Street traders betting the Federal Reserve will be able to engineer a soft landing spurred a rally in riskier corners of the market, with stocks hitting all-time highs.
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Almost every major group in the S&P 500 gained, with the benchmark up 1.7% and poised for its 39th record this year. The Nasdaq 100 climbed 2.9% and the Russell 2000 of small caps extended its advance into a seventh straight session. Bitcoin jumped 5%. Bonds and the dollar fell.
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The Fed’s bold start to cutting interest rates and its determination not to fall behind the curve re-ignited hopes the central bank will be able to avoid a recession. Data Thursday showing a slide in jobless claims to the lowest since May signaled the labor market remains healthy despite a slowdown in hiring.
“Despite some volatility after the Fed’s rate cut, the S&P 500’s bullish trend remains intact,” said Fawad Razaqzada at City Index and Forex.com. “The Fed’s decision to deliver a 50-basis point rate cut was largely welcomed by investors. The move was seen as a bold but necessary step to ease economic concerns without sending panic signals reminiscent of the 2008 financial crisis.”
Still, with the S&P 500 up about 20% in 2024 year-to-date, investors are wondering if the rally can be sustained.
“On the surface, it appears that market sentiment is bullish,” Razaqzada said. “Yet, looming risks, such as global economic slowdown in the Eurozone and China, may challenge this optimism. Moreover, seasonal trends indicate that September is typically a tough month for equities.”
The S&P 500 topped 5,700 while the Dow Jones Industrial Average hovered near 42,000.
The yield on 10-year Treasuries advanced three basis points to 3.74%. The pound rose as the Bank of England held rates steady and said it won’t rush to ease policy. The yen fell ahead of the Bank of Japan policy decision.
Key events this week:
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Japan CPI, rate decision, Friday
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China loan prime rates, Friday
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Eurozone consumer confidence, Friday
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Canada retail sales, Friday
Some of the main moves in markets:
Stocks
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The S&P 500 rose 1.7% as of 11:41 a.m. New York time
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The Nasdaq 100 rose 2.9%
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The Dow Jones Industrial Average rose 1%
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The Stoxx Europe 600 rose 1.4%
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The MSCI World Index rose 1.7%
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S&P 500 Equal Weighted Index rose 1%
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Bloomberg Magnificent 7 Total Return Index rose 3.7%
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The Russell 2000 Index rose 1.8%
Currencies
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The Bloomberg Dollar Spot Index fell 0.2%
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The euro rose 0.2% to $1.1143
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The British pound rose 0.4% to $1.3271
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The Japanese yen fell 0.5% to 142.95 per dollar
Cryptocurrencies
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Bitcoin rose 5% to $63,220.39
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Ether rose 4.7% to $2,436.06
Bonds
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The yield on 10-year Treasuries advanced three basis points to 3.74%
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Germany’s 10-year yield was little changed at 2.20%
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Britain’s 10-year yield advanced four basis points to 3.89%
Commodities
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West Texas Intermediate crude rose 2% to $72.34 a barrel
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Spot gold rose 1% to $2,583.54 an ounce
This story was produced with the assistance of Bloomberg Automation.
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