S&P 500 posts record closing high, US dollar and yields decline in wake of Fed
NEW YORK, Dec 11 : Major stock indexes mostly rose on Thursday, with the Dow and S&P 500 posting record closing highs, while the dollar and U.S. bond yields extended declines from the day before, when the Federal Reserve cut interest rates but gave a less hawkish outlook than expected.
It was the S&P 500's first record high close in over a month as investors shifted to sectors including financials and materials amid worries about the valuations of high-flying artificial intelligence stocks.
The Nasdaq ended lower along with technology-related shares following disappointing forecasts from Oracle.
Investors were considering the global interest rate outlook after the Fed lowered its benchmark funds rate, as expected, by 25 basis points to 3.5 per cent-3.75 per cent in a 9-3 split decision.
Fed Chair Jerome Powell sounded balanced at a press conference, saying he did not "think a rate hike is anyone's base case." That left interest rate futures with at least two rate cuts priced in for next year.
Shares of cloud computing company Oracle fell 10.8 per cent after it reignited jitters over stratospheric tech valuations by missing analysts' sales and profit estimates and flagging a $15 billion AI overspend. The S&P 500 tech sector was down as well and shares of AI leader Nvidia were down 1.6 per cent.
After the closing bell, shares of Broadcom were down about 3 per cent even as the AI chipmaker projected first-quarter revenue above Wall Street estimates. Broadcom shares closed the regular session down 1.6 per cent.
"AI is going to remain in focus for the next 24 hours or so," said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.
While tech was a drag, the S&P 500 financial sector rose 1.8 per cent on Thursday and materials gained 2.2 per cent.
The Dow Jones Industrial Average rose 646.26 points, or 1.34 per cent, to 48,704.01, the S&P 500 added 14.32 points, or 0.21 per cent, to 6,901.00 and the Nasdaq Composite fell 60.30 points, or 0.25 per cent, to 23,593.86.
MSCI's gauge of stocks across the globe rose 3.53 points, or 0.35 per cent, to 1,015.27. The pan-European STOXX 600 index finished 0.55 per cent higher.
DOLLAR HITS MULTI-MONTH LOWS
The U.S. dollar slumped, hitting multi-month lows against the euro, Swiss franc, and sterling and extending losses from the previous session.
The Swiss franc drew support from the Swiss National Bank's decision to hold interest rates steady. Against the Swiss franc, the dollar was down 0.6 per cent and earlier touched its lowest level since mid-November.
The euro was last up 0.4 per cent at $1.1740 and hit its highest level since October 3. Sterling was last flat on the day at $1.3387 after touching its highest level in roughly two months. The dollar also weakened against the yen, shedding 0.3 per cent to 155.61 yen.
U.S. Treasury yields also fell for a second straight session following the Fed policy news.
The U.S. central bank also said on Wednesday that purchases of short-dated government bonds will begin on Friday, with an initial round totalling around $40 billion in Treasury bills - a move that was earlier and larger than what investors had expected.
The yield on the benchmark U.S. 10-year Treasury note fell 2.3 basis points to 4.141 per cent. The yield snapped a four-session streak of gains on Wednesday, which was its longest run of gains in five weeks.
The yield on the 30-year bond shed 0.4 basis point to 4.792 per cent. An auction of $22 billion in 30-year bonds was solid, according to analysts, with demand of 2.36 times the notes on sale in line with the long-term average.
Earlier, the euro zone's benchmark Bund yield hovered near a nine-month high as investors shifted focus to next week’s European Central Bank meeting.
Germany’s 10-year yields, the euro zone's benchmark, were down 1.5 bps at 2.84 per cent on Thursday. They hit 2.894 per cent on Wednesday, their highest level since mid-March. The gap between U.S. and German yields dropped to 126.01, its lowest since June 2023.
Oil prices ended lower, with investors shifting their focus back to Russia-Ukraine peace talks. U.S. crude fell 86 cents to settle at $57.60 a barrel and Brent fell 93 cents to settle at $61.28.
