Extending the upward trend seen over the past couple weeks, stocks have moved mostly higher during trading on Tuesday. The Dow has once again reached a new record intraday high, while the Nasdaq and S&P 500 have climbed to their best intraday levels in almost two years.
Currently, the major averages are just off their highs of the session. The Dow is up 182.17 points or 0.5 percent at 37,488.19, the Nasdaq is up 69.77 points or 0.5 percent at 14,974.96 and the S&P 500 is up 19.47 points or 0.4 percent at 4,760.03.
Optimism about the outlook for interest rates continues to contribute to strength on Wall Street following the Federal Reserve’s monetary policy announcement last week.
While the Fed’s latest projections pointed to three interest rate cuts next year, investors widely expect the central bank to lower rates more aggressively.
Adding to the positive sentiment, San Francisco Federal Reserve President Mary Daly has said interest rate cuts are likely to be appropriate next year because of an improvement in inflation.
The Federal Reserve must make sure “we don’t give people price stability but take away jobs,” Daly told the Wall Street Journal in an interview.
CME Group’s FedWatch Tool is currently indicating a 67.5 percent chance the Fed lowers rates by a quarter point in March 2024.
On the U.S. economic front, the Commerce Department released a report this morning unexpectedly showing a substantial increase in new residential construction in the U.S. in the month of November.
The report said housing starts soared by 14.8 percent to an annual rate of 1.560 million in November after inching up by 0.2 percent to a downwardly revised rate of 1.359 million in October.
The surge surprised economists, who had expected housing starts to decrease by 0.9 percent to an annual rate of 1.360 million from the 1.372 million originally reported for the previous month.
Meanwhile, the Commerce Department said building permits slumped by 2.5 percent to an annual rate of 1.460 million in November after jumping by 1.8 percent to an upwardly revised rate of 1.498 million in October.
Building permits, an indicator of future housing demand, were expected to fall by 1.1 percent to an annual rate of 1.470 million from the 1.487 million originally reported for the previous month.
Sector News
Gold stocks have moved sharply higher on the day, driving the NYSE Arca Gold Bugs Index up by 3.2 percent to its best intraday level in five months.
The rally by gold stocks comes amid an increase by the price of the precious metal, with gold for February delivery climbing $13.30 to $2,053.80 an ounce.
Considerable strength is also visible among airline stocks, as reflected by the 1.6 percent gain being posted by the NYSE Arca Airline Index. With the gain, the index has reached a four-month intraday high.
Tobacco, brokerage and biotechnology stocks are also seeing notable strength, moving higher along with most of the other major sectors.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan’s Nikkei 225 Index jumped by 1.4 percent, while Australia’s S&P/ASX 200 Index advanced by 0.8 percent.
The major European markets have also moved to the upside on the day. While the German DAX Index has risen by 0.5 percent, the U.K.’s FTSE 100 Index is up by 0.2 percent and the French CAC 40 Index is just above the unchanged line.
In the bond market, treasuries have rebounded following the pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.8 basis points at 3.916 percent.
Business News
U.S. Stocks Continue To Benefit From Interest Rate Optimism
2023-12-19 16:04:42
