Wall Street shares gained at midsession on Thursday after London stocks rallied on a possible UK rate cut ahead and buoyant US data from the Midwest filtered through.
The market bellwether S&P 500 index was up 1% at 2,091 after the Bank of England hinted at a mid-year rate cut to fend off the risk of recession after the UK voted to quit the European Union.
Meanwhile, the Institute for Supply Management Chicago’s purchasing managers index jumped to 56.8 in May, from 49.3 the month prior — well above the 50 level that separates expansion from contraction. Wall Street expected a more modest increase to 51. It was the highest level since January 2015.
The S&P Midcap 400 was up 1.2% at 1,485, and led by Cypress Semiconductor (NASDAQ:CY) up 8.3% at $10.34, while the S&P Smallcap 600 was up 1.2% at 701. Small-caps were led by by Sanderson Farms Inc (NASDAQ:SAFM) up 6.4% at $87.91. There was no fresh news from either the Mid-cap nor Small-cap leaders on Thursday.
Traders said there might be some “window dressing” that is leading certain under-rated stocks to benefit from an end-of-month – and end-of quarter – lift to share price.
Even a weaker oil price failed to scupper the rally. The US oil benchmark West Texas Intermediate was down 2.4% at $48.68 – unwinding most of the gains of the past two days which saw the commodity priced briefly at $50 a barrel.
Preview
The rally in global shares continues as traders settle after the UK Brexit vote and US shares on Wall Street are seen opening higher.
On Wednesday, the S&P 500 index recording its biggest two-day jump since its 2016 nadir in mid-February, while the FTSE100 in London bounced back to pre-Brexit levels.
The benchmark Dow Jones closed out 1.64%, or 284 points higher at 17,694, while the tech heavy Nasdaq added 1.86% to 4,779, or 87 higher. The S&P500 gained 34 to stand at 2,070.
In futures trading today in New York, the S&P500 is up over five points, while the Nasdaq is trading six points higher.
The Dow Jones futures added 39 to stand at 17,663.
US crude currently stands at US$49.39 a barrel.
FTSE 100 in London is currently 25 higher, at 6,385, while the gold price is around seven lower at US$ 1,319 per ounce.
Commentators believe the markets are factoring in that central banks will step into help with any stimulus needes and that they are settling after the realisation that the UK is not pulling the trigger on a withdrawal from the European bloc any time soon.
That said, there are many unknowns and uncertain ahead, across the globe, not least for the fate of sterling against the dollar and whether and when the Fed will be pulling the trigger on an interest rate rise.
There is a smattering of company news expected ahead of the bell in New York, with Slim Jim maker ConAgra (NYSE: CAG) and restaurant group Darden Restaurants (NYSE:DRI), the parent firm of Olive Garden.