U.S. Stock Market Steady Near Record Highs Following Positive Economic Data
On October 17, 2024, U.S. stocks remained stable near their record heights following encouraging signals about the resilience of the U.S. economy. The S&P 500 closed nearly unchanged, while the Dow Jones Industrial Average gained 161 points, or 0.4%, setting a new record. The Nasdaq composite finished close to flat.
A significant boost came from the chip industry, particularly Nvidia, which experienced a gain of 0.9% after Taiwan Semiconductor Manufacturing Company (TSMC) reported better-than-expected profits for the latest quarter, driven by strong demand in smartphones and artificial intelligence. TSMC’s stock surged by 9.8% in the U.S. market.
Despite these gains, some companies faced declines. Alphabet, Google’s parent company, saw a 1.4% drop, while Elevance Health tumbled by 10.6% after reporting weaker-than-expected profits and cutting its full-year forecast due to increased claims and a “timing mismatch” with Medicaid rates.
The bond market responded positively to the latest economic reports, with Treasury yields rising. Data indicated that U.S. retailers’ sales in September exceeded August figures, reflecting underlying growth trends that surpassed economists’ expectations. Market strategist Gary Schlossberg from Wells Fargo Investment Institute noted the strength of retail sales, particularly given the challenging financial circumstances for lower-income households and pre-election uncertainties.
Another report revealed a decrease in unemployment benefit applications, suggesting low layoffs and a stable job market. These encouraging indicators bolster optimism that the U.S. economy may avoid a recession while navigating inflation, prompting the Federal Reserve to reduce interest rates to maintain economic momentum.
Globally, central banks, including the European Central Bank, have begun cutting interest rates, contributing to stock market optimism. The ECB’s decision to lower its main interest rate by a quarter of a percentage point positively impacted European stock indexes, which rose by 1.2% in France and 0.8% in Germany.
On Wall Street, Travelers was a key driver of the Dow’s record-setting day, with a 9% increase in stock price following stronger-than-expected profit and revenue reports. Blackstone also contributed positively, climbing 6.3% after announcing broader growth across its various businesses.
In contrast, CSX saw a decline of 6.7% after missing profit expectations and forecasting modest volume growth due to recovery efforts in the Southeast following hurricanes.
Overall, the S&P 500 slipped slightly, down by 1.00 point to close at 5,841.47, while the Dow gained 161.35 points to end at 43,239.05, and the Nasdaq composite rose by 6.53 points to 18,373.61.
The yield on the 10-year Treasury note rose to 4.09% from 4.02% late Wednesday, while the two-year yield increased to 3.98% from 3.94%. These shifts in Treasury yields reflect traders’ adjustments in response to strong economic data, with many now expecting the Federal Reserve to implement a quarter-point rate cut in November rather than a more aggressive reduction.
Key Takeaways:
- U.S. stocks are near record levels, with the Dow reaching a new high.
- Positive economic data supports optimism about the economy avoiding a recession.
- Interest rate cuts from the Federal Reserve and other central banks continue to influence market dynamics.
In summary, the U.S. stock market’s stability amidst positive economic indicators highlights the resilience of the economy, with investors looking forward to potential further growth in the coming months.
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