Dow, S&P 500 and Nasdaq Composite Trade at New Record Highs, U.S. Sues Apple

Barry Adams
21 Mar, 2024
New York City

Stocks continued to march higher on Wall Street on the second day and the widely followed S&P 500 and the Nasdaq advanced to new record highs. 

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.

 

Existing Home Sales Rebounded In February 

Existing-home sales advanced 9.5% in February to a seasonally adjusted annual rate of 4.38 million, the largest monthly increase since February 2023. 

Home sales declined 3.3% from a year ago as buyers struggled with affordability issues and tight inventory conditions, the National Association of Realtors reported Thursday. 

The median existing-home sales price jumped 5.7% from a year ago to $384,500, extending annual price increase to the eight month in a row. 

The inventory of unsold existing homes advanced 5.9% from the previous month to 1.07 million, or the equivalent of 2.9 months' supply at the current monthly sales pace.

 

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. 

Apple declined 3.6% to $172.18 after the Justice Department sued the iPhone maker alleging that the company's monopolistic policies are harming consumers, suppliers and rivals. 

 

European Markets Scale New Record Highs 

European stock market indexes hovered at multi-year highs as investors reviewed monetary policy decisions from several central banks. 

Benchmark indexes in Germany and France closed at new record highs, and the index in London jumped 2% after the Bank of England's rate decision. 

The Bank of England left its Bank Rate at 5.25%  in a majority vote 8-1 decision after the committee members awaited for more evidence of weakening inflationary pressures.  

 

U.S. Federal Reserve Holds Rates Steady, Lifts Growth Estimate

The Federal Reserve held steady its target range between 5.25% and 5.50% for the fifth time in a row and signaled that the central bank is prepared to lower rates by as much as 75 basis points over the rest of the year. 

The policymaker also sharply raised the estimate for the U.S. economy's annual growth to 2.1% from the previous estimate of 1.4% released in December. 

 

Swiss National Bank Cuts Rates by 0.25% 

The Swiss National Bank unexpectedly lowered its key lending rate for the first time in nine years, making it the first major central bank to ease monetary policy. 

The central bank cut its key lending rate by 25 basis points to 1.5%, citing reduced inflationary pressures and an appreciation of the Swiss franc in real terms over the past year. 

The central bank also estimated an annual inflation rate of 1.4% in 2024, 1.2% in 2025, and 1.1% in 2026. 

Despite the low inflation, the economy is expected to struggle, and annual economic growth in 2024 is expected to hover around 1.0%. 

 

Norges Bank Holds Rates Steady at 4.5% 

The Monetary Policy and Financial Stability Committee of Norges Bank decided to keep the policy rate unchanged at 4.5% at its meeting on Thursday.

The central bank reiterated the need to keep rates elevated as inflation is slowing but still too high; the depreciation of the Norwegian krone and high business costs and wage growth are keeping the inflation elevated. 

“The policy rate will likely need to be maintained at the current level for some time ahead in order to bring inflation back to the 2 percent target within a reasonable time horizon," said Governor Ida Wolden Bache.

The central bank projected that inflation is expected to remain elevated over the next six months before moderating in the final quarter of the year, and economic growth is expected to "remain low" in the first half of the year before picking up. 

 

Hybrid Car Market Share Expands In the EU

New car sales advanced for the second month in a row in February in the European Union, driven by strong demand in its four largest markets, especially France and Italy. 

The new car registration increase slowed to 10.1% from 883,608 units a year ago, following a 12.1% rebound in January. 

Passenger car sales rose 13% in France, 12.8% in Italy, 9.9% in Spain, and 5.4% in Germany. 

The market share of hybrid electric cars expanded 2.47% to 28.9%, and battery electric car sales increased 9% with a stable market share of 12%. 

However, diesel car sales contracted 5.1% and its market share eased to 12.9%, and petrol car sales increased 6.1% but its market share fell to 35.5% from 36.9% in the previous month. 

 

Europe Indexes and Yields

The DAX index increased by 0.9% to 18,172.93, the CAC-40 index rose by 0.2% to 8,177.26, and the FTSE 100 index inched higher by 1.9% to 7,882.55.

The yield on 10-year German bonds edged down to 2.39%; French bonds inched lower to 2.83%; the UK gilts edged lower to 4.0%; and Italian bonds inched lower to 3.64%.

The euro edged higher to $1.091, the British pound inched higher to $1.271, and the U.S. dollar held steady at 89.33 Swiss cents.

Brent crude decreased $0.59 to $85.35 a barrel, and the Dutch TTF natural gas fell by €1.33 to €26.42 per MWh.

 

Europe Stock Movers

Volkswagen, Renault, Porsche, and Stellantis advanced between 0.3% and 0.7% after passenger car sales jumped more than 10% in the European Union in February. 

Barclays PLC gained 2.7% to 180.50 pence after the UK-based bank is expected to announce job cuts in the investment banking division as the company looks to reduce costs in underperforming divisions. 

Next plc jumped 5% to 8,943.50 pence after the UK-based apparel retailer reported improved pre-tax income and confirmed its current-year outlook. 

3i Group advanced 5.4% to 2,665.0 pence after the private equity group said its largest portfolio company, the discount retailer Action, reported 2023 net sales increased 28% to €11.32 billion and operating earnings rose 34% to €1.62 billion from a year ago, respectively. 

Virgin Money UK jumped 2.5% to 213.10 pence after the company agreed on purchase terms with the Nationwide Building Society. 

The Nationwide Building Society jumped 1% to £135.73. 

Centamin PLC jumped 4.5% to 110.40 pence after the gold miner reported annual gold production in line with the company estimates. 

Veolia Environnement SA gained 0.6% to €29.25 after the French water works company was selected by the Greater Paris Water Authority to manage its storage and distribution of water for 12 years starting in 2025. 

 

Asian Markets Rebound Tracking U.S. Rate Driven Rally In New York 

Asian markets advanced, tracking gains in New York after the Federal Reserve held rates steady as widely expected. 

The Federal Reserve held steady its target range between 5.25% and 5.50% for the fifth time in a row and signaled that the central bank is prepared to lower rates by as much as 75 basis points over the rest of the year. 

The policymaker also sharply raised the estimate for the U.S. economy's annual growth to 2.1% from the previous estimate of 1.4% released in December. 

Stocks on Wall Street soared and powered a global market rally after the central bank's solid economic growth outlook with moderating inflation and interest rate expectations. 

 

Japan Indexes Close at New 34-year Record Highs 

Market indexes in Japan advanced following the U.S. Federal Reserve's rate decisions and the central bank confirming inflationary forces had eased "substantially." 

Market sentiment was also positive after exports rose for the third month in a row in February, and manufacturing activities contracted at the slowest pace since November in March. 

The au Jibun Bank Japan Manufacturing PMI increased to 48.2 in March from a final 47.2 in the previous month, which was the lowest level since August 2020, according to the preliminary report by S&P Global. 

Factory activities contracted for the tenth consecutive month, the weakest drop since last November.

The Nikkei 225 Stock Average jumped 1.9% to 40,777.70, and the Topix index advanced 1.5% to 2,792.94 and traded at a 34-year high. 

The yen traded around 151 against the U.S. dollar after the U.S. rate decision. 

Tech stocks led the gainers, with Softbank, Tokyo Electron, Advantest, and Screen Holdings gaining between 3% and 5%. 

Banks also scaled higher for the second week in a row in the hopes that the Bank of Japan will continue with its rate hike campaign. 

Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Group gained between 2% and 4%. 

 

Japan's Exports Rise 8% In February  

Japan's trade deficit decreased sharply to 379,358 billion yen, or $2.5 billion, in February from 928.908 billion in the same period of the prior year.

Exports advanced by 7.8% from a year ago to 8,249.21 billion, or $55 billion, driven by strong demand from the U.S. and China and higher shipments of automobiles and electrical machinery. 

China-bound shipments increased only 2.5%, suggesting moderate demand growth, while exports to the U.S. and European Union advanced 18.4% and 14.6%, respectively.

Exports advanced for the third month in a row, imports increased for the first time in eleven months, and trade balances swung to deficit for the second month in a row, the Ministry of Finance reported Thursday. 

However, the weak prices of energy products drove the increase in imports at a slower pace of 0.5% from a year ago (8,628.57 billion, or $60 billion), following the recovery in domestic demand. 

In 2023, Japan reported a trade deficit of 9.29 trillion yen, the third trade gap in a row reflecting the elevated price of energy in international markets. 

 

Hong Kong Property Stocks Soar After the HKMA Holds Rates Steady

Stock market indexes in Shanghai and Hong Kong diverged after the U.S. Federal Reserve announced its rate decision. 

Stocks on the mainland changed little in the absence of local economic news, but property stocks soared on the hopes that interest rates would be lower in the months ahead, following the lower U.S. interest rate outlook. 

The Hong Kong Monetary Authority, which tracks U.S. monetary policy, left its interest rate unchanged at 5.75% on Thursday, as the city's currency is pegged to the U.S. dollar. 

The CSI 300 index decreased 0.05% to 3,582.50, and the Hang Seng index soared 2.2% to 16,905.51.

Longfor Group, China Vanke, China Resources Land, and Henderson Land gained between 3% and 6%. 

Tech stocks also participated in the market rally, and Tencent Holdings, JD.com, Alibaba Group, Meituan, and Baidu advanced between 2% and 4%. 

 

India Indexes Rebound 1% 

Stocks in Mumbai rebounded and participated in the global market rally after the U.S. Federal Reserve held its interest rates steady. 

The Sensex and the Nifty indexes jumped as much as 1%, the Indian rupee held firm near its one-month low, and the yield on Indian government bonds held steady. 

The Sensex index increased 0.8% to 72,667.97, and the Nifty index edged up 0.8% to 22,020.35.