U.S. Major Averages Inch Higher In Record Territory Amid Rate Cut Expectations

Barry Adams
21 Mar, 2024
New York City

Positive market sentiment ruled for the second day in a row in Thursday's trading after the Federal Reserve signaled possible rate cuts this year. 

The S&P 500 index and the Nasdaq Composite scaled higher from the record close in Wednesday's session after the Federal Reserve held its key lending rate range between 5.25% and 5.50% and lifted the economic growth outlook to 2.1%. 

The Federal Reserve reiterated its December projection of possible rate cuts of as much as 75 basis points, despite the central bank lifting its economic growth outlook and estimating elevated inflation in the remainder of the year. 

For now, investors are celebrating the Fed's projection, but rate cuts are not guaranteed, and overall inflation is likely to spike in the months ahead. 

Crude oil prices have been on the rise for the last five weeks, and supply chain disruptions because of the ongoing disruptions of the shipping lanes in the Red Sea are also likely to contribute to overall inflation. 

Moreover, goods inflation is still elevated, and price pressures are building up in the service sector and broadening in the U.S. economy. 

Across the Atlantic, the Bank of England and Norges Bank held their policy rates at 5.25% and 4.5% on Thursday, as expected, respectively. 

However, the Swiss National Bank lowered its key lending rates by 25 basis points to 1.5%, leading other major central banks to cut rates first. 

Meanwhile, Turkey's central bank lifted its one-week repo rate from 45% to 50% after inflation in February soared to 67% in the financially challenged nation. 

Turkey reversed its loose monetary policy after inflation soared and the central bank lifted its interest rates by 36.5 percentage points between May 2023 and January 2024. 

 

U.S. Indexes and Yields

The S&P 500 index increased 0.4% to 5,256.10, and the Nasdaq Composite rose 0.9% to 16,516.09. 

The yield on 2-year Treasury notes decreased to 4.59%, 10-year Treasury notes inched down to 4.24%, and 30-year Treasury bonds edged down to 4.42%.

WTI crude oil decreased $0.17 to $81.17 a barrel, and natural gas prices decreased 1 cent to $1.68 a thermal unit.

Gold increased by $18.69 to $2,204.53 an ounce, and silver fell 22 cents to $25.34. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.60.

 

U.S. Stock Movers

Micron Technology increased 17.2% to $112.75 after the advanced chipmaker reported better-than-expected quarterly results. 

Five Below declined 12.5% to $182.85 after the deep discount retailer reported lower-than-expected revenue and earnings in the fiscal quarter, dominated by holiday sales. 

The company also estimated weaker-than-anticipated revenue and earnings in the fiscal first quarter and full year. 

Darden Restaurants declined 5.9% to $164.32 after the owner of Olive Garden and other chains reported weaker-than-expected revenue and earnings in its later quarter. 

Revenue in the fiscal third quarter was $2.97 billion, with a profit of $312.9 million, or $2.60 per share. 

The company estimated full-year revenue of $11.4 billion and diluted earnings per share between $8.80 and $8.90. 

Accenture dropped 6.5% to $356.50 after the information services provider's revenue outlook outweighed earnings in the fiscal second quarter.