July 12, 2024

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Dow Reaches Best Levels Since Early 2022 Amid Ongoing Interest Rate Optimism

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After initially showing a lack of direction, stocks have moved mostly higher over the course of the trading session on Friday. The Dow has risen to its best intraday level since early 2022, while the S&P 500 has reached a new four-month intraday high.

The major averages have seen further upside in recent trading, reaching new highs for the session. The Dow is up 190.21 points or 0.5 percent at 36,141.10, the S&P 500 is up 19.73 points or 0.4 percent at 4,587.53 and the Nasdaq is up 38.10 points or 0.3 percent at 14,264.32.

The strength on Wall Street partly reflects ongoing optimism about the outlook for interest rates following the release of a report from the Institute for Supply Management showing a continued contraction in U.S. manufacturing activity in the month of November.

The ISM said its manufacturing PMI came in at 46.7 in November, unchanged from October, with a reading below 50 indicating a contraction. Economists had expected the index to inch up to 47.6.

“The weaker-than-expected ISM survey will reinforce financial markets‘ expectations that the Fed’s next move is a cut,” said Bill Adams, Chief Economist for Comerica Bank.

Meanwhile, traders have shrugged off Federal Reserve Chair Jerome Powell’s comments calling speculation about interest rate cuts “premature” during remarks at Spelman College.

Powell acknowledged recent signs of slowing price growth but said the Fed is committed to keeping monetary policy restrictive until officials are confident inflation is on a path to 2 percent.

“It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease,” Powell said.

Powell stressed the Fed is prepared to tighten policy further if it becomes appropriate, although most economists believe the central bank is done raising rates.

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2023-12-01 12:06:19

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