On Tuesday, December 2nd, the S&P 500 and Nasdaq indices rose, with tech stocks boosting market sentiment. Expectations of a rate cut overshadowed cautiousness ahead of the release of key inflation data.
Nvidia’s stock price surged by 6%, reaching a high point in over a week. Tech stocks climbed as the market speculated on the Federal Reserve’s (Fed) impending rate cut, leading the information technology sector to lead the S&P 500’s gains.
The previous day, on Monday, cryptocurrency-related stocks saw significant selling pressure as bond yields rose, halting a week-long upward trend in the three major indices. However, the stock market bounced back shortly after.
Recent data showing a gradual slowdown in economic growth further solidified the market’s expectations of a rate cut at the Fed’s upcoming meeting. Peter Andersen, founder of Andersen Capital Management, believes the Fed is balancing public pressure to lower rates with the actual state of the economy.
He stated, “While there are some signs of softness, the overall trend is strong, so I don’t think it’s necessary to lower rates at this time.”
In recent weeks, a series of positive statements from key voting members has led traders to bet with an 87.4% probability that the Fed will cut rates by 25 basis points next week. The Chicago Mercantile Exchange’s FedWatch tool indicates that this probability is nearly double what it was a month ago.
Investors have now shifted their focus to the Personal Consumption Expenditures (PCE) index, a favored inflation indicator by the Fed, which is set to be released on Friday. This could further bolster expectations for Fed policy adjustments next week.
Meanwhile, the market is closely watching who will succeed current Fed Chair Powell whose term expires next year. White House economic advisor Kevin Hassett is reportedly a top candidate. The final decision is expected to be made by the President before Christmas.
As of 11:22 AM Eastern Time on Tuesday, the Dow Jones Industrial Average rose by 142.89 points, a 0.30% increase, to 47,432.20 points; the S&P 500 increased by 8.74 points, a 0.13% rise, to 6,821.37 points; and the Nasdaq Composite grew by 80.49 points, a 0.35% climb, to 23,356.41 points.
Boeing announced that higher 737 and 787 aircraft deliveries will be a key driver of the company’s cash flow next year. Following this news, the company’s stock price rose by 7.9%.
Warner Bros Discovery’s stock price gained 1% after reports of a second-round acquisition offer, including a bid from Netflix.
Cryptocurrency-related stocks performed well, with Strategy and Coinbase seeing increases of 4.2% and 2.6%, respectively. Following the largest single-day drop since May 2021 in the previous trading session, Bitcoin prices now show signs of stabilization.
On Tuesday, Federal Reserve Vice Chairman of Supervision Michelle Bowman is expected to testify at a hearing on financial regulatory oversight before the House Financial Services Committee.
At the New York Stock Exchange, the ratio of declining to advancing stocks was 1.08 to 1; while at the Nasdaq, the ratio of advancing to declining stocks was 1.12 to 1. Among the S&P 500 components, 9 stocks hit 52-week highs and 2 hit new lows, while in the Nasdaq, 54 stocks hit new highs and 64 hit new lows.