4:15pm: Weekly wins
The three major stock indexes finished Friday’s session in positive territory as investors now price in almost a 50% chance of a 50 basis point cut from the Fed next week, up from odds as low as 15% on Thursday.
The Dow Jones added 0.7% at 41,393 points, the Nasdaq was up 0.7% at 17,683 points and the S&P 500 gained 0.5% at 5,626 points.
1:05pm: Positive end to the week
US stocks are set to end the week on a high with investors looking with optimism to the Federal Reserve’s meeting next week, with as much as a 50 basis point cut to interest rates expected.
The Dow Jones added 0.8% at 41,428 points, the Nasdaq added 0.8% at 17,704 and the S&P 500 was up 0.6% at 5,631 points.
IG senior technical analyst Axel Rudolph noted that this week’s gains have seen the Dow Jones and the S&P 500 “within a whisker” of their record highs.
“Even though the tech-heavy Nasdaq 100 remains 6% below its high, it rose by a similar percentage this week alone, nearly wiping off its previous week's losses,” Rudolph said.
“Following data showing that US consumer sentiment is at a 4-month high, investors are now looking forward to next week's probable first US Fed interest rate cut, possibly by as much as 50 basis points. It'll be the first in over four years after holding rates at a 23-year high of 5.25% to 5.5% since last July.”
Oil prices, meanwhile, had recovered from a 16-month low as gold surpassed $2,600 per ounce.
"After a dismal start to the week and a fall in the crude oil price to levels last traded in May 2023, the commodity is on track for its third straight day of gains and first positive week in a month,” Rudolph said.
“The gold price continues to hit new record highs amid probable central bank buying."
11:20pm: Adobe issues weak guidance
Adobe shares fell 9% as weak revenue guidance overshadowed a record fiscal third quarter.
The creative software provider expected Q4 revenue in the range of $5.5 billion to $5.55 billion, short of analyst forecast of $5.6 billion.
Its net new annual recurring revenue guidance (NN ARR) of $550 missed the consensus of $570 million.
Jefferies analysts attributed the Q4 revenue guidance miss to the timing of large deals and Cyber Monday, in addition to extra conservatism amid accelerating AI usage.
“We believe FQ4 NN ARR guide could be very conservative, based on: stronger pricing tailwind; ramping monetization of AI; and accelerating momentum heading into MAX conference,” they wrote in a note to clients.
They believe fiscal 2025 could be the year of AI monetization for Adobe.
10.22am: Go big or go small? US interest rates are no closed book
Consensus has it that the US Federal Reserve will without a shadow of a doubt lower the bank rate for the first time since July 2023 when policymakers convene next Wednesday.
Of course, nothing is set in stone, but with inflation well down, that is the logical step.
One thing that isn’t set in stone is by how much will the Fed dare cut?
While a generic, palatable, middle-of-the-road 25-basis-point cut is the likely outcome, the odds of a heftier 50-basis-point cut are not zero.
The stakes are high- cutting too much risks inflation returning; not cutting enough risks the US economy steering headfirst into a recession.
Softer-than-expected jobs data emerging from the has served to increase the odds of a bigger cut, but hawks are still abound among the Fed decision makers, meaning there is no obvious outcome.
Fawad Razaqzada, market analyst at forex trading platform StoneX, had this to say: “It is indeed a slowing jobs market that has caused the Fed to pivot.
“You would think that after the hotter inflation data that the implied probability of a 50-bps cut would have dropped to zero.
“In fact, it did fall close to zero, but it has since bounced back to around 45%, and we are back to square one.
“This implies that there is an equally split chances of a 25bp or 50bp cut next week.
As a result, we have seen dollar weaken across the board, and gold has hit a new all-time high.”
9.50am: Warner leads big-cap risers
Tech stocks swung higher this morning, with the Nasdaq 100 penning a 0.2% gain to 19,442 in opening trades.
The Dow Jones Industrial Average is also looking well bid, adding 0.3% to 41,211, while the broader S&P 500 is also up around 0.3% to 5,611.
Warner Bros Discovery Inc (NASDAQ:WBD, ETR:J5A) is one of the biggest risers among the large caps, having rallied nearly 4% following the opening bell.
It follows an announcement that Charter Communications will start Charter Communications, the largest cable operator by subscribers in the US, will start providing Warner’s Max streaming service at no extra cost.
Oracle Corp (NYSE:ORCL, ETR:ORC), Uber Technologies Inc (NYSE:UBER, ETR:UT8) and Etsy Inc (NASDAQ:ETSY, ETR:3E2) are also among the biggest risers.
Adobe Inc (NASDAQ:ADBE) opened 9% lower after weak revenue guidance overshadowed a record fiscal third quarter.
8.26am: Markets looking well bid
US technology stocks are expected to hold onto yesterday’s percentage point of gains when Friday trading commences, with futures contracts on the Nasdaq 100 pointing to a flat opening at 19,440.
The Dow Jones Industrial Average is up 0.15% to 41,173 in the pre market, while the broader S&P 500 is up 0.2% to 5,610.
Stocks rebounded on Thursday afternoon as investors assessed new inflation and labor data, with growing anticipation of a quarter-point interest rate cut by the Federal Reserve next week.
On today’s macroeconomic calendar, yearly import prices for August are expected to show the sixth straight month of increases and export prices the fourth.