Wall Street Has Best Fed Day Of 2024 Across Assets: Markets Wrap

Stocks hit fresh all-time highs, climbing alongside bonds and commodities, in a concerted cross-asset advance that by one measure was the best for a Federal Reserve day in 2024.

Equities extended their post-election rally, with the S&P 500 approaching 6,000 and notching its 49th record this year. That was after Jerome Powell said the economy is strong while refraining from signaling whether the Federal Reserve will skip cutting rates, following Thursday’s reduction of a quarter percentage point. Treasury yields dropped across the curve and the dollar saw its biggest decline since August.

“Powell & Co. reminded investors about the solid economic footing the US continues to stand on,” said Bret Kenwell, US investment analyst at eToro. “Powell would not tip his hand on whether the Fed would likely cut rates in December, which shouldn’t surprise investors. However, the Fed appears more comfortable with the labor market and the current US economic backdrop than they did a few months ago.”

Fed officials unanimously lowered the federal funds rate to a range of 4.5% to 4.75%. They tweaked language to note “labor market conditions have generally eased,” and repeated “the unemployment rate has moved up but remains low.” The statement removed the reference to “further” inflation progress, noting inflation “has made progress toward the committee’s 2% objective but remains somewhat elevated.”

To Neil Dutta at Renaissance Macro Research, the latest Fed statement does not put a December skip in play.

“We thought Powell’s comments were generally dovish, and he gave several indications that a December cut remains his base case,” said Aditya Bhave at Bank of America Corp. “Given that the policy mix will not change for a while, we remain comfortable with our call for another 25bp cut in December.”

The S&P 500 rose 0.7%. The Nasdaq 100 climbed 1.5%. The Dow Jones Industrial Average was little changed. A Bloomberg gauge of the “Magnificent Seven” megacaps added 2.3%. Lyft Inc. jumped 23% after the ride-hailing company gave a bullish outlook. A closely watched gauge of banks dropped 2.7% after gaining over 10% in the previous session. JPMorgan Chase & Co. slid 4.3% after an analyst downgrade.

Treasury 10-year yields declined 10 basis points to 4.33%. The Bloomberg Dollar Spot Index fell 0.8%.

Wall Street’s Reaction to Fed:

• Neil Dutta at Renaissance Macro Research:

No skip signs here. I believe that it is a good thing that the Fed did not lay the blame on the recent labor market slowdown on the hurricanes or strikes. They are just sticking with have generally eased. This statement does not put a December skip in play.

• Sonu Varghese at Carson Group:

Powell does not seem inclined to predict where policy rates will be further out, nor make any predictions of what they expect for fiscal policy impact on the economy.

• Bill Adams at Comerica Bank:

In short, the Fed followed through with the cut signaled at the September decision, but was a little less adamant about the case for further rate cuts going forward. Powell did state that the Fed is still “on a path toward a more neutral stance.” But neutral is an theoretical idea, not a specific level.

• Luis Alvarado at Wells Fargo Investment Institute:

The Fed meeting today provided little drama for market watchers as a 25 basis point rate cut was fully expected.We believe the Fed will proceed cautiously in 2025 assessing if President Trump’s economic proposals eventually become actual policies and how those policies end up affecting inflation, labor markets and overall economic growth. As always, the Fed will be led by the economic data. 

• Jamie Cox at Harris Financial Group:

The balance of risks gives the Fed ample room to lower the Fed Funds rate well into 2025.  Markets should not expect supersized rate cuts unless the economy turns south, and doesn’t look at all likely for awhile.

• Whitney Watson at Goldman Sachs Asset Management:

With additional inflation and employment data in, the Fed went 25 basis points as expected.  We expect the same to occur in December.  However, stronger data and uncertainty over fiscal and trade policies mean rising risks that the Fed may opt to slow the pace of easing. The word “skip” could enter our vocabulary in 2025.

• Greg McBride at Bankrate:

The Federal Reserve continues to lift the foot off the brake pedal, cutting interest rates by one-quarter percentage point, as expected. The solid pace of economic growth means the Fed can abandon the urgency seen with the half-point cut in September and take a more deliberate, quarter-point pace with this and future rate cuts.

• Jeffrey J. Roach at LPL Financial:

Investors are searching for equilibrium after reeling from such large moves in rates over the course of the last two months. Predictably, investors had developed unreasonable expectations about the magnitude of rate cuts over the next few quarters and now with a focus on deficits, markets must reorient to reality.

Corporate Highlights:

• Qualcomm Inc. and Arm Holdings Plc, two chip companies heavily dependent on the smartphone market, delivered earnings reports that signaled a tentative comeback in demand.

• Under Armour Inc. reported results that surpassed analysts’ expectations as the sportswear company’s turnaround gains momentum under founder Kevin Plank.

• Ralph Lauren Corp. raised its outlook for the year, citing strong sales in Europe and Asia and expectations for a solid holiday shopping season.

• Hershey Co. cut its outlook for growth in net sales growth and earnings as consumer pullback drives down volume sales, while “historically high” cocoa costs have driven price hikes.

• Warner Bros. Discovery Inc., the parent of the Max streaming service, gained more subscribers than expected in the third quarter, suggesting its online business is picking up.

• Match Group Inc. lowered its full-year revenue forecast, a disappointment to investors who were expecting a turnaround at the dating app company amid pressure from activists.

• Barrick Gold Corp.’s latest quarterly earnings show the gold producer continues to struggle to control costs and capitalize on the surging price of bullion.

• Moderna Inc. delivered better-than-expected profit and sales in the third quarter after an early start to sales of this season’s Covid boosters.

• Carlyle Group Inc. Chief Executive Harvey Schwartz made progress lifting margins and earnings on fees in the third quarter, a period when shareholder profits from deal exits remained muted for the firm.

• SolarEdge Technologies Inc. took a $1 billion writedown and warned margins for the current quarter will be non-existent or even negative.

• CommScope Holding Co. released third-quarter results and said it yet to reach debt refinancing or recapitalization agreement with a group of creditors.

• Kenvue Inc., the owner of Tylenol and Neutrogena, reported sales that trailed estimates after its skin health and beauty category slowed.

• Virgin Galactic Holdings Inc. reported third-quarter revenue short of expectations and a share issuance of as much as $300 million to pay for a new space tourism vehicle.

• Tapestry Inc. raised its guidance for the year, citing better-than-expected quarterly revenue at its Coach brand and strong sales in Europe.

• Grifols SA, the Spanish pharmaceutical company hit by a short seller attack this year, reported rising profit in the third quarter and repeated its full-year guidance.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.8% as of 3:38 p.m. New York time

• The Nasdaq 100 rose 1.6%

• The Dow Jones Industrial Average rose 0.1%

• The MSCI World Index rose 1%

Currencies

• The Bloomberg Dollar Spot Index fell 0.8%

• The euro rose 0.6% to $1.0798

• The British pound rose 0.8% to $1.2980

• The Japanese yen rose 1.1% to 152.95 per dollar

Cryptocurrencies

• Bitcoin rose 0.8% to $76,558.87

• Ether rose 7.4% to $2,887.75

Bonds

• The yield on 10-year Treasuries declined 10 basis points to 4.34%

• Germany’s 10-year yield advanced four basis points to 2.45%

• Britain’s 10-year yield declined six basis points to 4.50%

Commodities

• West Texas Intermediate crude rose 0.5% to $72.07 a barrel

• Spot gold rose 1.8% to $2,706.68 an ounce