By Shristi Achar A and Amruta Khandekar
(Reuters) – Wall Street’s three main indexes rose on Wednesday as U.S. Treasury yields slipped to multi-month lows on growing rate cut optimism, while latest data on economic growth fueled hopes of a soft landing.
The S&P 500 and the Dow Jones are within a close range of their highest intra-day levels in 2023.
U.S. stocks ended marginally higher on Tuesday after Fed Governor Christopher Waller, deemed a hawk, hinted at lower interest rates in the months ahead if inflation continued to eases.
Other similar positive comments sent Treasury yields tumbling, with the yield on the benchmark 10-year note last at an over two-month low of 4.2686%.
The drop in yields on fixed-income investments, which make equities more attractive, lifted megacap stocks, with Nvidia, Tesla and Apple up between 0.8% and 1.8%.
Ten of the 11 major S&P 500 sectors traded higher, led by information technology, while the small-cap Russell 2000 index rose 1.2%.
“Markets are starting to adjust to the idea that there will indeed be a soft landing and that lower interest rates or stable interest rates will prevail throughout 2024,” said Peter Andersen, founder of Andersen Capital Management in Boston.
Andersen said that strong GDP figures, the second estimate released earlier in the day, add to the narrative of the Fed managing to avoid a recession that will support a strong year-end rally.
The latest GDP data showed the U.S. economy in the third quarter grew faster than initially thought.
Traders are now awaiting the release of the “Beige Book”, a snapshot of the U.S. economy, at 2:00 p.m. ET, and the personal consumption expenditure (PCE) index – Fed’s preferred inflation gauge- due on Thursday, for further cues on how the economy is faring under restrictive monetary conditions.
Money market participants have fully priced in a pause in rate hike in the upcoming December meeting, while bets of rate cuts starting as early as March have gone up to 44.5% from 34.6% a day earlier, according to the CME Group’s FedWatch tool.
At 9:37 a.m. ET, the Dow Jones Industrial Average was up 64.38 points, or 0.18%, at 35,481.36, the S&P 500 was up 28.26 points, or 0.62%, at 4,583.15, and the Nasdaq Composite was up 125.18 points, or 0.88%, at 14,406.93.
Among single stocks, General Motors rose 10.3% as the automaker said it will buy back $10 billion in shares and boost its dividend by 33%. Shares of rival Ford also rose 4.5%.
CrowdStrike Holdings added 3.8% as the firm forecast fourth-quarter revenue above Street estimates.
NetApp jumped 14.6% after the cloud-based data management platform raised its annual profit forecast.Advancing issues outnumbered decliners by a 4.75-to-1 ratio on the NYSE and by a 3.01-to-1 ratio on the Nasdaq.
The S&P index recorded 21 new 52-week highs and no new lows, while the Nasdaq recorded 46 new highs and 23 new lows.
(Reporting by Shristi Achar A and Amruta Khandekar in Bengaluru; Editing by Shinjini Ganguli)
