Wall Street is drifting near record highs amid hopes that Tuesday’s moves by Japan’s central bank to keep interest rates easy for investors could be a preview for the rest of the world. The S&P 500 was 0.2% higher in early trading, just 1% shy of its record set a little bit less than two years ago. The Dow Jones Industrial Average was up 64 points, or 0.2%, coming off its own record high. The Nasdaq composite was 0.3% higher.
Quick Read
- Wall Street Near Record Highs: Anticipation of Japan’s central bank keeping interest rates low boosts investor optimism, with the S&P 500 and Dow Jones approaching record highs.
- Enphase Energy’s Workforce Cut: The solar energy company announced a 10% global workforce reduction, contributing to market movement.
- Accenture’s Lower Revenue Forecast: The consulting company’s forecast fell short of expectations, causing its stock to dip.
- Japan’s Interest Rate Decision Influences Markets: The Nikkei 225 rose after Japan’s decision to maintain negative interest rates, spurring borrowing and spending.
- Expectations for the Federal Reserve: The Federal Reserve may pivot from hiking interest rates due to lower inflation and ongoing economic growth, with possible rate cuts in 2024.
- Fed Chair Powell’s Comments Impacting Expectations: Powell’s recent remarks have not strongly opposed traders’ expectations for rate cuts next year.
- Housing Industry Showing Strength: November saw a higher-than-expected number of new home constructions.
- Debate Over Market Rally: Critics argue the market rally might be excessive, with stocks priced high relative to company profits.
- Fed Officials Cautious About Rate Cuts: Some Fed officials express hesitation about the likelihood of rate cuts, considering economic conditions.
- S&P 500’s Winning Streak: The index has seen seven consecutive weeks of gains, its longest streak in six years.
- Investor Inflows into U.S. Stocks: Bank of America reported substantial net inflows into U.S. stocks.
- Bond Market Movements: The yield on the 10-year Treasury slightly decreased, having been above 5% in October.
- Kenvue’s Court Ruling: The Tylenol maker saw a favorable court ruling regarding the alleged link between acetaminophen and autism or attention deficit disorder.
- Alphabet’s Settlement Over Android App Store: Google agreed to a $700 million settlement and concessions over competition allegations in its Android app store.
The Associated Press has the story:
Wall Street ticks up, S&P 500 is within 1% of its record on rate-cut hopes
Newslooks- NEW YORK (AP)
Wall Street is drifting near record highs amid hopes that Tuesday’s moves by Japan’s central bank to keep interest rates easy for investors could be a preview for the rest of the world.
The S&P 500 was 0.2% higher in early trading, just 1% shy of its record set a little bit less than two years ago. The Dow Jones Industrial Average was up 64 points, or 0.2%, coming off its own record high. The Nasdaq composite was 0.3% higher.
Enphase Energy jumped 5.5% after the maker of microinverters for the solar energy industry told employees it will cut 10% of its global workforce and make other streamlining changes. It helped offset a 1.4% dip for Accenture after the consulting and professional-services company gave a forecast for upcoming revenue this quarter that fell short of analysts’ expectations.
Stock markets abroad were mixed in mostly quiet trading. Japan was an exception, and the Nikkei 225 jumped 1.4% after the country’s central bank decided to keep its benchmark interest rate below zero in hopes of encouraging more borrowing and spending.
The S&P 500 has rallied roughly 15% since late October on hopes that a similar approach may be coming to Wall Street. With inflation down from its peak two summers ago and the economy still growing, the rising expectation is for the Federal Reserve in 2024 to pivot away from its campaign to hike interest rates dramatically.
Fed Chair Jerome Powell seemed to give a nod toward such hopes last week when he did not push forcefully against traders’ expectations for several cuts to rates next year. Wall Street loves lower rates because they give investment prices a boost and relax the pressure on the economy and the financial system.
The hope is the Fed can pull off what was earlier seen as the trickiest tightrope walk, by first getting inflation under control through high interest rates and then cutting rates lower before they can push the economy into a recession
A report on Tuesday morning showed the housing industry appears to be in stronger shape than expected. Homebuilders broke ground on many more new homes in November than expected, 200,000 more at a seasonally adjusted annualized rate.
Of course, Wall Street’s big rally also has critics saying the market’s rally looks overdone and that stocks now look too expensive relative to how much profit companies are making. More cautious investors also say the number of rate cuts traders are penciling in for 2024 looks unlikely unless the U.S. economy falls into a recession.
Some Fed officials have also been sounding more cautious about the prospect for rate cuts since Powell’s comments last week. On Friday, for example, the president of the Federal Reserve Bank of New York said it was “premature to be even thinking” about whether to cut rates in March.
Markets have nevertheless been ebullient, with the S&P 500 coming off its seventh straight winning week for its longest such streak in six years.
Showing how ravenous buyers have become, clients at Bank of America poured $6.4 billion more into U.S. stocks last week than they withdrew. It’s the fourth-largest weekly inflow since it began tracking the data in 2008, strategist Jill Carey Hall said in a BofA Global Research report.
In the bond market, the yield on the 10-year Treasury slipped to 3.92% from 3.94% late Monday. It was above 5% in October, at its highest level since 2007 and putting tremendous downward pressure on the stock market.
Elsewhere on Wall Street, shares of Tylenol maker Kenvue jumped 5.2% following a favorable ruling in federal court. The company sought to exclude the opinions of experts in a multijurisdictional against it on whether in-utero exposure to acetaminophen, the pain reliever used in Tylenol and other generic drugs, could lead to autism or attention deficit disorder.
Judge Denise Cote of U.S. District Court for the Southern District of New York agreed with Kenvue, ruling Monday that the testimony was inadmissible.
“This is a clean sweep for the defendants with none of the plaintiffs’ expert witness testimony being deemed admissible for general causation,” wrote analysts with J.P. Morgan. “While there may be some legal wrangling ahead, we believe Judge Cote’s ruling effectively collapses the plaintiffs’ case.”
Alphabet added 0.5% after its Google business settled allegations that it stifled competition against its Android app store, agreeing to $700 million and making several concessions.
