Wall Street’s main indexes held on to their gains on Thursday in the run-up to the Federal Reserve’s interest-rate decision, extending a sharp rally sparked by Donald Trump’s stunning comeback as U.S. president for a second time.
Traders have about fully priced in a 25-basis-point rate cut, but will keep a close watch on the central bank’s commentary for clues on the future path of monetary easing.
Investor expectations that Trump would lower corporate taxes and loosen regulations had lifted all three major indexes in the previous session.
Adam Turnquist, Chief Technical Strategist for LPL Financial said it was the S&P 500’s best post-Election Day performance on record.
On Thursday too, all the three major indexes were trading at record highs.
“You have a pretty solid economy … a Fed that’s cutting interest rates and incoming administration that is pretty pro growth and equity markets,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.
However, much would depend on the central bank’s rate-cut outlook. Traders have already trimmed their bets to just two rate cuts in 2025 on consistently robust economic data and after accounting for the chances of higher inflation stemming from Trump’s proposed tariffs and government spending.
Wall Street rallies to record high as Trump returns as US president
“The Fed’s commentary about the rate-cut outlook will be particularly important for markets, given the recent post-election surge in bond yields,” said Glen Smith, chief investment officer, GDS Wealth Management.
Treasury yields are hovering near multi-month highs, though the benchmark 10-year yield eased slightly.
Meanwhile, some of the Trump trades that surged after his sweeping victory gave back gains, with Trump Media & Technology dropping 16%.
After hitting a record high on Wednesday, Financials lost 1.1%, led by a 2.9% slide in JPMorgan Chase, which also weighed on the Dow.
The small cap Russell 2000 slipped 0.1%, but was still trading around three-year highs it touched in the last session.
Information technology sector rose 1.1.%, while rate-sensitive industrials edged lower and energy lost 0.8%.
The Dow Jones Industrial Average rose 71.53 points, or 0.16%, to 43,801.46, the S&P 500 gained 27.22 points, or 0.46%, to 5,955.73 and the Nasdaq Composite gained 167.47 points, or 0.88%, to 19,150.94.
Data showed U.S. weekly jobless claims rose marginally last week, suggesting no material change in labor market conditions.
Focus is also on whether Republicans could win control of both houses of Congress, making it easier for Trump’s policies to be enacted.
Qualcomm shares jumped 1.7% after the chipmaker forecast current-quarter results above estimates, while U.S.-listed shares of chip designer Arm Holdings fell 3.1% as its quarterly forecasts disappointed investors.
Warner Bros Discovery soared 14.2% after a surprise third-quarter profit.
The VIX, Wall Street’s “fear gauge,” was trading at a six-week low.
Advancing issues outnumbered decliners by a 1.95-to-1 ratio on the NYSE and a 1.45-to-1 ratio on the Nasdaq.
The S&P 500 posted 34 new 52-week highs and one new low, while the Nasdaq Composite recorded 121 new highs and 32 new lows.
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