By Isla Binnie NEW YORK (Reuters) – U.S. stock indexes sailed higher in the wake of their global counterparts and the dollar wobbled on Thursday after the Federal Reserve started a long-awaited interest rate cutting cycle with a chunky half-point move. The U.S. central bank gave a boost to risk assets on Wednesday with a […]
By Isla Binnie
NEW YORK (Reuters) – U.S. stock indexes sailed higher in the wake of their global counterparts and the dollar wobbled on Thursday after the Federal Reserve started a long-awaited interest rate cutting cycle with a chunky half-point move.
The U.S. central bank gave a boost to risk assets on Wednesday with a larger-than-usual cut to borrowing costs, a forecast they would fall further, and a message that the world’s biggest economy was not facing a slowdown.
Megacap tech stocks including Microsoft and Apple led the rally on Wall Street. Smaller companies, which might be expected to enjoy reduced operating costs and cheaper debt in a lower rates environment, also felt the benefit.
The tech-heavy Nasdaq Composite climbed 2.39%, to 17,994.07.
The blue-chip Dow Jones Industrial Average rose 0.97%, to 41,903.85. The benchmark S&P 500 hit another intraday high and was last seen up 1.54%, to 5,704.89.
The Russell 2000 small-cap index rose as much as 2%.
Jobless claims for the week ended Sept. 14 came in lower than the market expected , injecting optimism that the U.S. could be aiming for economists’ ideal scenario of cooling inflation without triggering a recession.
The claims came in low, so it’s only going to help fuel the idea that a soft landing is in play,” said Ross Mayfield, investment strategist at Baird.
“The guidance for plenty more cuts by the end of 2025 should open up (rate-sensitive) sectors to reengage and expand,” Mayfield added.
U.S. Treasury yields also rose after the jobless claims report . [US/]
Buoyed by the prospect of more cuts from the Fed before the end of the year, MSCI’s 47-country world stocks index rose 1.45%, to 838.30.
The Bank of England’s decision to leave interest rates unchanged appeared not to dampen market spirits in Europe, with the STOXX 600 index last up more than 1%. Sterling strengthened 0.29% against the dollar to $1.325.
CURRENCIES, COMMODITIES
In currency markets, the dollar edged slightly lower in choppy trading . The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.14% to 100.88. [/FRX]
Gold was up while oil and the industrial metals complex were stronger on the view that lower rates equal stronger demand. [O/R]
Oil prices rose more than 1% but bearish concerns remained that the outsized interest rate cut pointed to a weakening labor market undermining the economy. Benchmark Brent crude futures climbed back above $74 a barrel for the first time in more than a week, and U.S. crude was at $71.41 a barrel. [O/R]
The bonanza week for interest rate decisions continues on Friday with the Bank of Japan . It is not expected to make a move now, but may buck the global trend and line up another rate hike for as soon as October.
(Reporting by Isla Binnie in New York; Additional reporting by Marc Jones in London; Editing by Will Dunham)
