Wall St gains ahead of Fed officials' remarks; Dow nears 40,000 mark
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 8, 2024. REUTERS/Brendan McDermid/File Photo
By Sruthi Shankar and Shristi Achar A
(Reuters) – U.S. stocks rose on Friday, as investors eagerly awaited comments from Federal Reserve officials to get more clarity on the U.S. monetary policy path, after economic data this week supported bets of interest rate cuts.
Wall Street indexes were inching closer to record highs following a selloff last month, as a slew of economic data pointed to a cooling U.S. labor market, raising expectations that the Fed will cut borrowing costs more than once this year.
A much better-than-expected earnings season has also helped put the benchmark S&P 500 and the tech-heavy Nasdaq Composite on track for their third consecutive week of gains.
The Dow Jones Industrial Average was up for the eight straight session, its longest daily winning run since December, and set for a fourth week of gains.
The blue-chip index was also closing in on the 40,000 threshold for the first time.
“This is the classic point of bad news is good news because the employment data over the last two weeks has been what the Fed has finally been looking for,” said Hugh Anderson, managing director at HighTower Advisors.
“Of course it isn’t good for the job seeker, but it creates an optimistic environment for the market because now they’re looking for their interest rate cuts.”
Traders are currently pricing in 45 basis points of rate cuts by the end of 2024, according to LSEG’s rate probabilities tool, with the first cut of 25 bps seen in September.
While most Fed policymakers have reiterated that the next policy move will be a rate cut, doubt still remains about when the easing will begin.
There is “considerable” uncertainty about where U.S. inflation will head in coming months, San Francisco Fed President Mary Daly said on Thursday.
Speeches from a host of Fed policymakers — Minneapolis President Neel Kashkari, Dallas President Lorie Logan and Vice Chair for Supervision Michael Barr — during the day, could offer more clues on the rate path.
Investors will also closely monitor the University of Michigan’s preliminary survey of consumer sentiment for May, which is due at 10 a.m. ET.
Of the 11 S&P 500 sectors, information technology led gains with a 1% advance.
At 09:37 a.m. ET, the Dow Jones Industrial Average rose 165.26 points, or 0.42%, to 39,553.02, the S&P 500 gained 20.84 points, or 0.40%, to 5,234.92 and the Nasdaq Composite gained 67.49 points, or 0.41%, to 16,413.76.
Nvidia gained 2% in early trading after Taiwan Semiconductor Manufacturing Co, the world’s largest chipmaker and a major supplier to Nvidia, reported a near 60% jump in April sales.
Novavax shares more than doubled in value after the vaccine maker removed doubts about its ability to remain in business and struck a licensing deal worth up to $1.2 billion with Sanofi for COVID-19 vaccines.
SoundHound AI jumped 19.5% after its first-quarter revenue beat market estimates.
Advancing issues outnumbered decliners by a 2.37-to-1 ratio on the NYSE and by a 1.41-to-1 ratio on the Nasdaq.
The S&P 500 posted 42 new 52-week highs and no new lows, while the Nasdaq recorded 104 new highs and 17 new lows.
(Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru; Editing by Shounak Dasgupta and Shinjini Ganguli)