NEW YORK, Sept 19 (Askume) – U.S. stock indexes rose on Thursday in line with global equity markets and the dollar fell after the Federal Reserve began a long-awaited interest rate cutting cycle.
The Federal Reserve cut borrowing costs faster than usual on Wednesday , boosting risk assets, predicting further losses and sending a message that the world’s largest economy is not facing a recession.
Wall Street’s rally was led by big tech stocks such as Microsoft (MSFT.O) and Apple (AAPL.O) . Smaller companies, which can enjoy lower operating costs and cheaper debt in a low-interest rate environment, are also feeling the benefits.
The technology-heavy Nasdaq index (.IXIC) rose 2.39% to 17,994.07.
The blue-chip Dow Jones Industrial Average (.DJI) rose 0.97% to 41,903.85. The benchmark S&P 500 index (.SPX) hit a new intraday high and closed up 1.54% at 5,704.89.
The Russell 2000 small-cap index (.RUT) rose 2%.
Jobless claims for the week ended September 14 were lower than market expectations, raising hopes that the US could work toward economists’ ideal scenario of reducing inflation without deepening a recession.
“Claims are low, which would further reinforce the idea of a soft landing,” said Ross Mayfield, investment strategist at Baird.
“Guidance for further reductions through the end of 2025 would allow (rate-sensitive) sectors to reengage and expand,” Mayfield said.
US Treasury yields also rose after the release of the jobless claims report.
The Morgan Stanley Capital International (MSCI) 47-country world equity index (.MIWD00000PUS) rose 1.45% to 838.30, buoyed by the prospect of further interest rate cuts by the Federal Reserve before the end of the year.
The Bank of England’s decision to keep interest rates unchanged did not dampen enthusiasm in European markets, with the STOXX 600 (.STOXX) index rising more than 1%. GBP/USD rose 0.29% to $1.325.
currency, commodities
In currency markets, the US dollar declined in volatile trading. The US dollar index, which measures the greenback against a basket of currencies including the yen and euro, fell 0.14% to 100.88. /FRX
Gold prices rose while the oil and industrial metals complex remained steady on the belief that low interest rates mean strong demand.
Oil prices rose more than 1%, but pessimists remain concerned that excessive interest rate cuts could put pressure on the labor market and weaken the economy. Benchmark Brent crude futures rose above $74 a barrel for the first time in more than a week, while U.S. crude was at $71.41 a barrel.
The great week continues with the Bank of Japan’s interest rate decision on Friday. No action is expected for now, but contrary to global trends, another rate hike is possible in October.
