(New York) The New York Stock Exchange closed higher on a record Wednesday celebrating the U.S. Central Bank’s (Fed) status quo on rates and the possibility of future cuts, sending bond yields tumbling.
The Dow Jones Index gained 1.40%, climbing above 37,000 points for the first time in its history, to 37,090.24 points. The technology-dominated NASDAQ gained 1.29% to 14,720.66 points and the S
Bond yields, which move inversely to bond prices, fell to the lowest since early August for ten-year yields at 4.01% (-4.39%) around 4 p.m. East), compared to 4.20% the day before.
The Fed’s Monetary Committee (FOMC) meeting was “very dove,” summed up Spartan Capital’s Peter Cardillo, borrowing stock market language to describe a more dovish stance from the central bank.
As expected, the committee kept rates unchanged for the third time in a row, leaving them at their toughest level in 22 years to keep inflation in check.
But the Central Bank’s economic forecasts are more optimistic than expected, with inflation forecast at just 2.4% by the end of next year, down from 2.5% previously.
And above all, the famous “dot plots”, these average rate change projections, made individually by FOMC members, show that the Fed could reduce its overnight rates “three times next year”, noted Peter Cardillo.
“The question is when,” the analyst stressed.
For Chris Low, chief economist at FHN Financial, “given the plan to cut rates three times” by a quarter of a percentage point this year, “it makes sense to think that the first rate cut could begin in June “.
Jerome Powell, the president of the institution, acknowledged, while remaining cautious, that the timing of a possible rate cut was “a subject of discussion” during the Committee meeting.
This was all it took to delight investors.
These had already been reinforced by the pace of wholesale prices which slowed down in November, according to the PPI index.
Producer prices thus remained stable.
Price growth was zero month-on-month in November, after they fell 0.4% in October compared to September, while analysts expected prices to rise slightly, to 0.1%.
Year-on-year, growth is slowing, with prices rising 0.9% compared to 1.2% last month.
On the market, Pfizer Laboratories fell 6.75% to $26.65. The group has forecast a decline in sales in 2024 due to poor demand for anti-COVID-19 vaccines and drugs.
Toy maker Hasbro gained 3.08%. The market considered positive the announcement of a reduction of another 900 positions within two years, a decision which comes a few months after the announcement of a first cut of 15% of its workforce (1000 employees).
Hasbro reported a net loss of $171 million in the third quarter due to a sharp drop in business in its core business of traditional toys and games.
Tesla, down in the first part of the session due to a major recall on its vehicles, finally finished in the green (0.96%).
The electric vehicle manufacturer had to recall some two million cars in the United States for an increased collision risk linked to “autopilot”, its driver assistance system.
Online artisan commerce site Etsy lost 1.89% after announcing an 11% reduction in its workforce, or the loss of 225 jobs.