4:20pm: Russell 2000 surges
The Dow closed Thursday up 158 points, 0.4%, at 37,248, the Nasdaq Composite gained 28 points, 0.2%, to 14,762 and the S&P 500 added 12 points, 0.3%, to 4,720. The small-cap Russell 2000 index rose 53 points, 2.7%, to 2,001.
The indexes continued the rally sparked Wednesday by the Federal Reserve's decision to leave interest rates unchanged and hint at three rate cuts to come next year.
“The Fed delivered the dovish pivot that we expected heading into the December meeting,” Michael Gapen, chief U.S. economist at Bank of America, wrote on Wednesday. “While we did not expect the Fed to move to an outright easing bias, we did expect it to move to a more balanced reaction function and, in the event, we think it did just that.”
Meanwhile, the 10-year Treasury note yield fell below the 4% threshold for the first time since August.
12:05pm: 10-year Treasury yield heads below 4%
US stocks were higher in noon trading as the 10-year Treasury yield fell below 4% for the first time since August and a surprise gain in November retail sales sparked hopes for a soft economic landing.
At midday, the Dow rose 104 points to 37,194, while the S&P 500 added 20 points at 4,727 and the tech-heavy Nasdaq gained 44 points to 14,779.
"The Fed delivered the dovish pivot that we expected heading into the December meeting," Bank of America chief US economist Michael Gapen wrote.
Notable movers included shares of Moderna Inc, which surged 13% after the pharma giant and Merck released data showing its experimental cancer vaccine helped reduce the risk of death or relapse in patients with melanoma cancer after three years.
9:40am: US markets extend gains on Fed's Christmas cheer
US markets opened higher on Thursday as the Federal Reserve’s interest rate pivot saw Christmas arrive early on Wall Street.
Shortly after the opening bell, the Dow Jones Industrial Average was up 99.67 points, 0.3%, at 37,189.91, the S&P 500 was up 24.27 points, 0.5%, at 4,731.36 and the Nasdaq Composite was up 81.40 points, 0.6%, at 14,815.37.
“The Fed’s acknowledgement that cuts will come in 2024 has fuelled positivity,” said Susannah Streeter at Hargreaves Lansdown.
That mood was further boosted by a surprise in retail sales which rose, despite markets forecasting a drop, figures showed on Thursday.
According to the Census Bureau, US retail sales rose by 0.3% in November from October, compared to expectations for a 0.1% decline.
Excluding automobiles, sales rose 0.2% in November from October.
They had been flat on-month in October.
Economists at ING said the much better than expected figures, combined with a tight labour market means there is little prospect of an imminent rate cut despite the Fed's dovish shift yesterday.
Meanwhile, US initial unemployment benefits claims fell in the most recent week, numbers on Thursday showed.
According to the US Department of Labor, initial jobless claims totalled 202,000 in the week ended December 8, falling from 221,000 a week prior.
The previous week's reading was upwardly revised from 220,000.
7:00am: Christmas comes early for markets as Fed pivots
US markets are expected to open higher after the Federal Reserve signalled rate cuts were on the way in 2024.
In pre-market trading, futures for the Dow Jones Industrial Average were up 0.3%, while those for the S&P 500 were 0.3% higher and contracts for the Nasdaq 100 futures climbed 0.4%.
The US central bank left interest rates unchanged at the conclusion of its two-day meeting on Thursday but released projections which showed a majority of officials expect 75 basis points of interest rate cuts in 2024.
Jim Reid at Deutsche Bank said; “Yesterday’s FOMC meeting did its best to give investors an early Christmas present, all packaged with a bow and extra special gift wrapping.”
Ian Shepherdson at Pantheon Macroeconomics said the Fed "is catching up with the reality that the credibility of its threats to hike again has been near-zero in markets for some time now."
Paul Ashworth at Capital Economics thinks the first rate cut will probably come at the March meeting next year.
Elsewhere, retail sales are expected to have fallen 0.1% in November, which would match October’s decline, while weekly jobless claims are forecast of 220,000 in the week ended December 9, the same figure as the previous seven-day period.