Stocks Rise as Bond Yields Sink in Fed Countdown: Markets Wrap

(Bloomberg) — Stocks hit fresh all-time highs, Treasuries rebounded and the dollar fell the most since August, with the Federal Reserve widely expected to lower interest rates on Thursday.

Equities extended their post-election rally, with the S&P 500 approaching the 6,000 milestone. Most major groups advanced, with Apple Inc. and Nvidia Corp. leading gains in megacaps. Lyft Inc. jumped 24% after the ride-hailing company gave a bullish outlook. A closely watched gauge of banks dropped 2% after gaining over 10% in the previous session. JPMorgan Chase & Co. slid 4% after an analyst downgrade.

US policymakers have already communicated a desire to proceed with a more gradual pace of rate cuts after September’s half-point reduction. Economists widely expect a quarter-point move on Thursday, followed by another in December. The decision will be announced at 2 p.m. Washington time, with Jerome Powell holding a press conference 30 minutes later.

“The Fed’s commentary about the outlook for rate cuts going forward will be particularly important for markets, given the recent post-election surge in bond yields, which undoubtedly complicates the Fed’s efforts to move to a less restrictive policy stance,” said Glen Smith at GDS Wealth Management. “The Fed may pause its pace of rate cuts in December and throughout much of 2025 as inflation slows and the economy continues to remain strong.”

The US stock rally is nowhere near done, according to Evercore ISI strategists, who see Donald Trump’s plans to slice through red tape propelling the S&P 500 to 6,600 points by end-June 2025.

History shows the bull market is “still an infant,” Julian Emanuel wrote in a note. “This market will be driven higher by the policy prospect of deregulation in DC,” he noted.

The S&P 500 rose 0.7%. The Nasdaq 100 rose 1.4%. The Dow Jones Industrial Average was little changed. A Bloomberg gauge of the “Magnificent Seven” megacaps climbed 2.1%. The Russell 2000 of small firms fell 0.1%.

Treasury 10-year yields declined eight basis points to 4.35%. The Bloomberg Dollar Spot Index fell 0.7%. The pound gained as traders pared bets on further Bank of England easing.

Corporate Highlights:

• Qualcomm Inc. and Arm Holdings Plc, two chip companies heavily dependent on the smartphone market, delivered earnings reports that signaled a tentative comeback in demand.
• Under Armour Inc. reported results that surpassed analysts’ expectations as the sportswear company’s turnaround gains momentum under founder Kevin Plank.
• Ralph Lauren Corp. raised its outlook for the year, citing strong sales in Europe and Asia and expectations for a solid holiday shopping season.
• Hershey Co. cut its outlook for growth in net sales growth and earnings as consumer pullback drives down volume sales, while “historically high” cocoa costs have driven price hikes.
• Warner Bros. Discovery Inc., the parent of the Max streaming service, gained more subscribers than expected in the third quarter, suggesting its online business is picking up.
• Match Group Inc. lowered its full-year revenue forecast, a disappointment to investors who were expecting a turnaround at the dating app company amid pressure from activists.
• Barrick Gold Corp.’s latest quarterly earnings show the gold producer continues to struggle to control costs and capitalize on the surging price of bullion.
• Moderna Inc. delivered better-than-expected profit and sales in the third quarter after an early start to sales of this season’s Covid boosters.
• Carlyle Group Inc. Chief Executive Harvey Schwartz made progress lifting margins and earnings on fees in the third quarter, a period when shareholder profits from deal exits remained muted for the firm.
• SolarEdge Technologies Inc. took a $1 billion writedown and warned margins for the current quarter will be non-existent or even negative.
• CommScope Holding Co. released third-quarter results and said it yet to reach debt refinancing or recapitalization agreement with a group of creditors.
• Kenvue Inc., the owner of Tylenol and Neutrogena, reported sales that trailed estimates after its skin health and beauty category slowed.
• Virgin Galactic Holdings Inc. reported third-quarter revenue short of expectations and a share issuance of as much as $300 million to pay for a new space tourism vehicle.
• Tapestry Inc. raised its guidance for the year, citing better-than-expected quarterly revenue at its Coach brand and strong sales in Europe.
• Grifols SA, the Spanish pharmaceutical company hit by a short seller attack this year, reported rising profit in the third quarter and repeated its full-year guidance.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.7% as of 1:12 p.m. New York time
• The Nasdaq 100 rose 1.4%
• The Dow Jones Industrial Average was little changed
• The MSCI World Index rose 0.9%
• Bloomberg Magnificent 7 Total Return Index rose 2.1%
• The Russell 2000 Index fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index fell 0.7%
• The euro rose 0.7% to $1.0800
• The British pound rose 0.8% to $1.2982
• The Japanese yen rose 1% to 153.02 per dollar

Cryptocurrencies

• Bitcoin rose 0.5% to $76,350.82
• Ether rose 6.5% to $2,864.8

Bonds

• The yield on 10-year Treasuries declined eight basis points to 4.35%
• Germany’s 10-year yield advanced four basis points to 2.45%
• Britain’s 10-year yield declined six basis points to 4.50%

Commodities

• West Texas Intermediate crude rose 1.3% to $72.65 a barrel
• Spot gold rose 1.5% to $2,697.72 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rheaa Rao.

©2024 Bloomberg L.P.