Wall Street has been trading sharply higher since the opening of the session as investors reacted to the Fed's decision and employment data, which reinforced the prospect of a 'soft landing' for the US economy (Image: REUTERS/Lucas Jackson/File Photo)
Wall Street returned to its glory days this Thursday (19). The indexes operated in strong growth since the opening of trading and renewed historical intraday records, with investors reacting to the beginning of the cycle of interest rate cuts in the United States.
Check out the closing of the New York indexes:
- S&P 500: +1.70%, to 5,713.64 points;
- Dow Jones: +1.26%, at 42,025.19 points;
- Nasdaq: +2.51%, at 18,013.98 points.
During the trading session, the Dow Jones index renewed its intraday record, at 42,000 points. The S&P 500 closed at its highest level, surpassing 5,700 points.
What moved Wall Street today?
Yesterday (18), the Federal Reserve, the North American central bank, cut interest rates by 0.50 percentage points (pp), taking the rate to the range of 4.75% to 5.00% per year.
This was the first reduction since March 2020 and marks the beginning of the monetary easing cycle in the United States. Rates had remained unchanged since July 2023.
Along with the decision announcement, the US Federal Reserve released the dot plot (“dot plot“), updated quarterly. In it, nine directors see the interest rate at 4.40% by the end of 2024 – which opens a window for two cuts of 0.25 basis points at the next FOMC meetings.
In other words, the Fed should bring the interest rate (Fed Funds) to the range of 4.25% to 4.50% by the end of the year, more than they predicted in June, as inflation approaches the 2% target and unemployment rises.
Furthermore, the market reacted to new labor market data.
The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting that job growth accelerated in September.
Initial claims for state unemployment benefits fell by 12,000 last week to a seasonally adjusted 219,000 in the week ended Sept. 14, the Labor Department said on Thursday (19). Economists polled by Reuters had forecast 230,000 claims for the latest week.
The data consolidates the perspective of a “soft landing” for the North American economy, that is, the adjustment of inflation to the target with the movement of interest rates without the economy entering a recession.
Technology stocks also rose sharply as interest rate cuts tend to encourage investors to return to risk. Nvidia (NVDA)for example, jumped more than 4%.
*With information from Reuters