4:05pm: Gold shines as crude oil dives
The three major indexes were able to stay in positive territory at the close on Thursday, as investor sentiment was boosted by the Fed signalling that its rate hike cycle is nearing its end.
The Nasdaq led the gains, up 1% at 11,787 points, with the S&P 500 up 0.3% at 3,949 points and the Dow Jones up 0.2% at 32,105 points at the close.
Gold also shined, up 2.5% at US$1997.70 per ounce at the close. Crude oil did not fare as well, finishing the day down 2.2% at US$69.35 per barrel.
12:05pm: Stocks rally as Fed Chair signals possible end to rate increases
US stocks moved up sharply in noon trading after Federal Reserve Chair Jerome Powell signaled the Fed’s interest rate increases may be nearing an end.
At midday, the Dow gained 399 points to 32,429, while the S&P 500 added 59 points at 3,996 and the tech-heavy Nasdaq rose 245 points to 11,916.
“Pretty much every major and minor regional bank, throughout every region of the country, has gone down dramatically in the last week or so. I do think there’s a lot of contractionary things coming,” Spouting Rock Management chief strategist Rhys Williams said.
“Therefore, I think the Fed needs to be mindful of this risk, and look for continuing ways to probably help the economy as opposed to hurt it, over the next quarter or two,” he added.
Notable movers included shares of Block Inc, which fell more than 11% after short seller Hindenburg Research said the company’s flagship Cash App facilitates crime and lacks strong compliance controls.
9:40am: Jobless claims come in below expectations
Shortly after the opening bell, the Dow was 196 points, 0.6% to 32,336, the Nasdaq Composite added 150 points, 1.3%, to 11,820 and the S&P 500 improved 34 points, 0.9%, to 3,971.
The market is showing signs of recovery after closing well into the red Wednesday following the Fed's decision to increase interest rates by 25 basis points.
What's more, investors are also weighing jobless claims, which came in below expectations this morning.
“US initial jobless claims came in slightly lower than expected at 191,000 vs expected 197,000," said Ryan Brandham, head of global capital markets, North America at Validus Risk Management. "At the margin, this reinforces the current market theme of resilient US labour markets and sticky inflation. This further highlights the challenge facing the FOMC: can they provide enough liquidity to promote stability in the financial system and still get inflation down towards the 2% target? It will not be easy for them. The 4-week average is certainly not rising, underlining this strength in US labour markets”.
7:30am: Dovish Fed says no rate cut soon
Wall Street is expected to open higher as investors continue to digest the Fed’s dovish 25 basis point increase as well as Treasury Secretary Janet Yellen’s simultaneous comments that a blanket guarantee of bank deposits has not been discussed or considered.
Futures for the Dow Jones Industrial Average (DJIA) rose 0.3% in Thursday pre-market trading while those for the broader S&P 500 index gained 0.6% and contracts for the Nasdaq-100 added 1%.
After initially rising on the news of the Fed’s interest rate hike, US stocks changed course and were deep in the red at the close on Wednesday. The S&P 500 fell 1.7% to 3,937 points, the DJIA lost 1.6% to 32,030 points, and the Nasdaq Composite was down 1.6% at 11,670 points at the closing bell.
The losses came as markets sought to make sense of the "duelling narrative” from Yellen and Fed chair Jerome Powell at the end of the two-day Federal Open Market Committee (FOMC) meeting, commented TickMill Group market analyst Patrick Munnelly.
“On the one hand FOMC chair Powell pretty much stuck to the script, raising rates by the expected 25bps while reducing near-term expectations for further imminent raises,” Munnelly said. “Powell pushed back against the market pricing rate cuts, stating that this wasn't a baseline expectation for 2023 and that the Committee was prepared to do more on rates if needed.”
“The fly in the ointment and the catalyst for the sharp reversal in gains seen during Powell’s press conference came from Treasury Secretary Yellen's testimony, as she stated that the Treasury is not considering insuring all uninsured bank deposits, flip-flopping on initial posturing that a backstop for all deposits was in the offing," Munnelly added. "This led to investors dumping risk exposure into the close of trading.”