(Bloomberg) — Stocks hit new all-time highs and rose along with bonds and commodities in a concerted advance across assets that was the Federal Reserve’s best single-day gain in 2024 by one measure.
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Stocks continued their post-election rally, with the S&P 500 nearing 6,000 and posting its 49th record high this year. That was after Jerome Powell said the economy is strong, but declined to indicate whether the Federal Reserve will skip interest rate cuts after Thursday’s quarter-percentage point cut. Government bond yields fell across the curve and the dollar saw its biggest decline since August.
“Powell & Co. reminded investors of the solid economic foundation the US continues to stand on,” said Bret Kenwell, US investment analyst at eToro. “Powell would not say whether the Fed is likely to cut rates in December, which should not surprise investors. However, the Fed appears to be more comfortable with the labor market and current economic environment in the US than it was a few months ago.”
Fed officials unanimously cut the federal funds rate to a range of 4.5% to 4.75%. They amended the language to note that “labor market conditions have generally eased” and reiterated “the unemployment rate has increased but remains low.” The statement removed reference to “further” inflation progress, noting that inflation “has made progress toward the committee’s 2% target, but remains somewhat elevated.”
According to Neil Dutta of Renaissance Macro Research, the Fed’s latest statement does not mean there will be a skip of December.
“We found Powell’s comments generally forgiving, and he provided several indications that a December cut remains his base case,” said Aditya Bhave of Bank of America Corp. “Given that the policy mix is not likely to change anytime soon, we remain comfortable with our call for another 25 basis point cut in December.”
The S&P 500 rose 0.7%. The Nasdaq 100 climbed 1.5%. The Dow Jones Industrial Average was little changed. A Bloomberg measure of the “Magnificent Seven” megacaps added 2.3%. Lyft Inc. rose 23% after the taxi company gave a bullish outlook. A closely watched indicator of banks fell 2.7%, after rising more than 10% in the previous session. JPMorgan Chase & Co. fell 4.3% after an analyst downgrade.
The yield on ten-year government bonds fell by 10 basis points to 4.33%. The Bloomberg Dollar Spot Index fell 0.8%.