US Markets
Tuesday, September 17th, 2024 3:14 pm EDT
Key Points
- Record Highs for U.S. Markets: The S&P 500 hit a record high as investors anticipated the Federal Reserve’s interest rate cut decision, with the Nasdaq and Dow Jones also reaching new peaks.
- Retail Sales Surpass Expectations: Retail sales in August increased 0.1%, defying economist expectations of a decline, signaling strong consumer resilience.
- Fed’s Interest Rate Cut Speculation: Investors are divided on the expected size of the Fed’s rate cut, with a 59% chance of a 50-basis-point reduction, though concerns about the broader economic health remain.
On Tuesday, the S&P 500 reached an all-time high, trading 0.6% higher and hitting a new record of 5,670.81. The Nasdaq Composite gained 1%, while the Dow Jones Industrial Average rose by 0.4%, marking new heights for all three indices. This surge comes as the market anticipates the Federal Reserve’s decision on an interest rate cut, which is expected to be announced on Wednesday. Historically, September has been a difficult month for the S&P 500, averaging a 1.3% loss over the past decade, but the index defied expectations amid economic concerns and recent setbacks, such as disappointing August job and manufacturing data. The rebound in equities can be attributed to encouraging data and the market’s confidence that the Fed will lower rates.
Wall Street is particularly focused on the Fed’s next move, as a rate cut could alleviate pressure on companies facing high borrowing costs and inflation. The Fed has been on an aggressive rate-hiking path since March 2022, but expectations of a rate cut have risen, with a 59% chance that the Fed will reduce rates by 50 basis points, up from 47% on Friday. However, opinions are divided on the size of the potential cut, and a steeper reduction might indicate further concerns about the economy’s health. Analysts like Adam Turnquist from LPL Financial warn that a 50-basis point cut could signal a downgrade in the Fed’s view of the labor market.
Meanwhile, several major companies made notable moves. Microsoft saw a more than 1% increase after announcing a 10.7% dividend hike and a $60 billion buyback program. Intel shares jumped by 6.2% following the company’s announcement to make its foundry business a subsidiary, while also securing up to $3 billion in funding from the Biden administration through the CHIPS Act. In other sectors, China Internet and large-cap ETFs enjoyed strong gains, led by companies like Li Auto and iQIYI, with the KraneShares CSI China Internet ETF (KWEB) up around 2%.
Consumer discretionary stocks were also on the rise, led by Airbnb, which saw a 5.8% increase. Aptiv and Pool Corporation were other top performers in the sector. Retail sales data released earlier showed unexpected resilience, with a 0.1% increase in August, defying expectations of a 0.2% decline. Excluding autos, sales also rose by 0.1%, slightly missing the forecast. Miscellaneous stores and online retailers saw significant growth, but gas stations and clothing stores reported declines in sales.
In the energy and utilities sectors, investors have shown increasing interest in defensive stocks like utilities, with the sector up 24% this year. The expectation that electricity demand will surge due to factors like artificial intelligence and the electrification of the economy has boosted the sector. Conversely, energy stocks, particularly crude oil futures, have been under pressure, with the sector down 5% this month, marking a stark contrast to the utilities sector’s strength.
Despite overall market optimism, Wells Fargo analysts have noted that stock market struggles could persist. The S&P 500 has experienced a late-summer peak followed by a decline for the past seven years, and with ongoing economic concerns, geopolitical risks, and uncertainty surrounding artificial intelligence, the market may continue to face challenges in the coming months.
In Europe, markets opened higher on Tuesday as central bank meetings across the continent remain a key focus for investors. European stocks, including the FTSE 100 and the DAX, posted gains, with construction and materials sectors also advancing. However, the energy sector continues to underperform, reflecting global challenges in crude oil markets and concerns about energy demand. Overall, the market is navigating a complex mix of factors, from interest rate expectations to sector-specific developments, making the upcoming Federal Reserve decision critical for shaping market momentum in the near future.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/09/16/stock-market-today-live-updates.html
