U.S. stock market rally/ Wall Street hits new high/ S&P 500 sets record/ global stock surge/ Newslooks/ NEW YORK/ J. Mansour/ Morning Edition/ Wall Street climbed toward a new record on Thursday, with the S&P 500 up 0.5% and tech stocks leading the charge, as optimism about China’s economic stimulus bolstered global markets. The Dow Jones rose 180 points, while the Nasdaq jumped 0.9%. Investors are hopeful that the U.S. economy remains strong as the Federal Reserve continues its shift toward lower interest rates.
Quick Looks
- S&P 500 rises 0.5%, aiming for another all-time high.
- Tech stocks lead the rally, driven by companies like Micron Technology.
- Global markets surge on optimism around China’s economic stimulus efforts.
Wall Street Rallies, S&P 500 Nears New Record
Deep Look
Wall Street is on course to set another record as U.S. stocks rallied Thursday morning, with the S&P 500 up 0.5%, positioning the index for its third all-time high this week and the 42nd high of the year. As of 10:20 a.m. Eastern time, the Dow Jones Industrial Average gained 180 points, or 0.4%, and the Nasdaq composite surged 0.9%.
Tech Stocks Lead the Rally
Technology stocks, which have been driving the market for years, continued their upward momentum. Micron Technology saw a significant boost, climbing 17.1% after reporting stronger-than-expected earnings for the latest quarter, largely driven by rising demand for artificial intelligence (AI) technology. Similarly, Jabil, an electronics manufacturer, saw its shares jump 13.4% after exceeding profit and revenue forecasts. The company also announced plans to buy back $1 billion of its stock, providing further confidence to investors.
Global Optimism Boosted by China
The rally wasn’t limited to the U.S. Global markets saw an upswing, particularly in Asia, as hopes grew for further https://www.newslooks.com/wall-street-drifts-as-markets-pause-at-records/ China’s Politburo signaled intensified efforts to meet the country’s growth targets, sparking optimism among investors. Earlier in the week, China’s central bank had introduced measures to boost the economy, particularly targeting the struggling real estate sector.
Stock markets around the world responded positively to the news. Hong Kong’s Hang Seng index surged 4.2%, while Shanghai’s index climbed 3.6%. The upbeat mood extended to Europe, with France’s CAC 40 rising 2.2% and Germany’s DAX gaining 1.6%. In Japan, the Nikkei index rose by 2.8%, buoyed by SK Hynix, which announced it had begun production of a new AI-focused memory chip.
U.S. Economic Data Provides Reassurance
Closer to home, investors received positive economic signals from the Labor Department, which reported a decline in jobless claims. Only 218,000 people filed for unemployment benefits last week, marking the lowest figure in four months and further indication that the labor market remains resilient.
In addition, the U.S. economy grew at a robust 3% annual rate in the second quarter, consistent with previous estimates. This solid growth, coupled with lower inflation, gives hope that the economy can continue to expand without triggering a recession.
Investors are increasingly optimistic about the possibility of a so-called “soft landing,” in which the Federal Reserve can lower interest rates without causing a significant slowdown in the economy. Last week, the Fed made a notable shift by cutting its benchmark interest rate by half a percentage point, a move designed to support economic growth after two years of rate hikes aimed at curbing inflation.
Fed and Global Central Banks Lower Rates
The Federal Reserve is not the only central bank easing its monetary policy. Central banks worldwide, including the Swiss National Bank, are cutting rates following the global inflation slowdown. The Swiss National Bank trimmed its main rate on Thursday, contributing to the positive sentiment in financial markets.
Bond Market Holds Steady
In the bond market, yields remained relatively stable. The 10-year Treasury yield held at 3.79%, while the two-year yield, which closely tracks expectations for Federal Reserve policy, rose to 3.61% from 3.56% on Wednesday.
Oil Prices Slip as Saudi Arabia Signals Output Increase
Not all markets shared in the optimism. Oil prices declined after reports that Saudi Arabia is preparing to abandon its unofficial target price of $100 per barrel, instead preparing to increase output. U.S. crude oil fell 3.1% to $67.56 per barrel, while Brent crude, the international standard, dropped 2.6% to $70.97.
The decline in oil prices weighed on energy stocks. Exxon Mobil, a key player in the sector, saw its stock fall 2%, making it the biggest drag on the S&P 500 index.
A Positive Outlook for the Markets
Despite some concerns about the potential for weakening in the U.S. labor market, the overall outlook remains positive. The combination of easing inflation, lower interest rates, and strong corporate earnings, particularly in the tech sector, has created a favorable environment for continued growth in the stock market.
With interest rates set to remain lower in the near future and China stepping up efforts to boost its economy, investors are hopeful that the current momentum will continue, pushing global markets and Wall Street to new heights.
