Nasdaq, S&P 500 Reach New Record Closing Highs, Dow Ends Nearly Unchanged

After moving sharply higher over the two previous sessions, stocks showed another strong move to the upside during trading on Thursday. With the continued advance, the Nasdaq and the S&P 500 reached new record closing highs.

The tech-heavy Nasdaq led the charge, surging by 285.99 points or 1.5 percent to 19,269.46, while the S&P 500 climbed 44.06 points or 0.7 percent to 5,973.10.

The narrower Dow, on the other hand, spent the day lingering near the unchanged line before closing down just 0.59 points at 43,729.34.

The continued strength on Wall Street partly reflected ongoing optimism about the impact of former President Donald Trump’s return to the White House.

Trump’s policies are expected to be positive for corporations and the U.S. economy, although there are some concerns about the effect planned tariff increases will have on inflation.

The markets also benefited from Trump’s victory over Vice President Kamala Harris being decisive, avoiding the uncertainty that would be created by a prolonged vote counting process and potential legal challenges.

Stocks saw continued strength as the Federal Reserve announced its widely expected decision to lower interest rates by a quarter point.

After aggressively slashing interest rates by half a percentage point in September, the Fed said it has decided to lower the target range for the federal funds rate by 25 basis points to 4.50 to 4.75 percent.

The central bank said its decision to continue lowering rates comes as labor market conditions have generally eased, while inflation continues to make progress towards its 2 percent objective.

However, the Fed said the risks to achieving its dual goals of maximum employment and inflation at the rate of 2 percent over the longer run are roughly in balance.

“The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate,” the Fed said.

In considering future adjustments to rates, the central bank said it will continue to carefully assess incoming data, the evolving outlook, and the balance of risks.

Fed Chair Jerome Powell stressed during his post-meeting press conference that rates are not on “any preset course” and said the central bank will make future decisions “meeting by meeting.”

Powell also said the Fed is “well positioned” to deal with the risks to both sides of its dual mandate, noting the it can cut rates more slowly or more quickly depending on the economic developments.

Sector News

Semiconductor stocks extended the surge seen over the two previous sessions, driving the Philadelphia Semiconductor Index up by 2.3 percent.

Considerable strength was also visible among software stocks, as reflected by the 1.9 jump by the Dow Jones U.S. Software Index.

Gold stocks also saw significant strength amid a sharp increase by the price of the precious metal, moving notably higher along with retail and commercial real estate stocks.

On the other hand, banking stocks pulled back sharply after Wednesday’s spike, dragging the KBW Bank Index down by 2.7 percent. Telecom, oil service and brokerage stocks also gave back ground.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. While Japan’s Nikkei 225 Index fell by 0.3 percent, Hong Kong’s Hang Seng Index shot up by 2.0 percent and China’s Shanghai Composite Index spiked by 2.6 percent.

Meanwhile, European stocks moved mostly higher on the day. The German DAX Index surged by 1.7 percent and the French CAC 40 Index advanced by 0.8 percent, although the U.K.’s FTSE 100 Index bucked the uptrend and declined by 0.3 percent.

In the bond market, treasuries saw a notable rebound following the sell-off seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 8.5 basis points to 4.341 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to the University of Michigan’s preliminary report on consumer sentiment in the month of November, which includes readings on consumers’ inflation expectations.