U.S. Stocks See Further Upside Following Dovish Fed Pivot

Following the substantial rally seen late in the previous session, stocks saw further upside during trading on Thursday. Buying interest was somewhat subdued on the day, although the Dow still managed to reach a new record closing high.

The Dow climbed 158.11 points or 0.4 percent to 37,248.35, closing higher for the sixth consecutive session. The Nasdaq edged up 27.59 points or 0.2 percent to 14,761.56 and the S&P 500 rose 12.46 points or 0.3 percent to 4,719.55, reaching their best closing levels in almost two years.

Stocks continued to benefit from a positive reaction to the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed left interest rates unchanged, as widely expected, and signaled plans to cut interest rates three times next year.

Since the Fed’s projections are often more conservative, traders are expecting the central bank to slash rates even further than forecast in 2024.

Adding to optimism the economy is headed toward a soft landing, the Commerce Department released a report this morning showing an unexpected increase in U.S. retail sales in November.

The Commerce Department said retail sales rose by 0.3 percent in November after slipping by a downwardly revised 0.2 percent.

Economists had expected retail sales to edge down by 0.1 percent, matching the dip originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales inched up by 0.2 percent in November after coming in unchanged in October. Ex-auto sales were expected to slip by 0.1 percent.

Meanwhile, the Labor Department released a separate report showing first-time claims for U.S. unemployment benefits unexpectedly decreased in the week ended December 9th.

The report said initial jobless claims fell to 202,000, a decrease of 19,000 from the previous week’s revised level of 221,000.

Economists had expected jobless claims to come in unchanged compared to the 220,000 originally reported for the previous week.

Sector News

Housing stocks turned in some of the market’s best performances on the day, driving the Philadelphia Housing Sector Index up by 5.8 percent to a record closing high.

Substantial strength was also visible among banking stocks, as reflected by the 5.1 percent spike by the KBW Bank Index. The index reached its best closing level in over nine months.

Oil service stocks also moved sharply higher along with the price of crude oil, with the Philadelphia Oil Service Index surging by 4.4 percent.

Brokerage, commercial real estate and semiconductor stocks also saw significant strength, while software and utilities stocks showed notable moves to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index shed 0.7 percent, while Hong Kong’s Hang Seng Index jumped by 1.1 percent.

Meanwhile, European stocks moved mostly higher on the day. The U.K.’s FTSE 100 Index surged by 1.3 percent and the French CAC 40 Index climbed by 0.6 percent, although the German DAX Index bucked the uptrend and edged down by 0.1 percent.

In the bond market, treasuries extended the substantial rally seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 10.3 basis points to a new four-month closing low of 3.930 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to the Federal Reserve’s report on industrial production in the month of November.

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