Wall Street advances as traders' bets rise for bigger Fed rate cut
Updates with preliminary closing prices
By Sinéad Carew and Shashwat Chauhan
Sept 13 (Reuters) -Wall Street's main indexes closed higher on Friday as investors honed in on the chanceof a bigger interest rate cut by the Federal Reserve next week, with rate-sensitive small cap stocks outperforming.
Bets on the size of the Fed's cut have been volatile and were roughly even by late Friday. Expectations for a 50 basis point cut jumped to 49% from 28% on Thursday, CME's FedWatch Tool showed, compared with a 51% probability for a 25 basis point cut.
Former New York Fed President Bill Dudley said late Thursday there was a strong case for a 50-bps interest rate cut.
Reports in theWall Street Journal and other media had said early Thursday the Fed faces a difficult decision on how much to ease on Sept. 18.
"There's just rumblings that have started to bubble up again that the discussion in the Fed is leaving 50 basis points on the table," Jim Baird, chief investment officer with Plante Moran Financial Advisors, Southfield, Michigan.
Prior to this,bets on the Fed sticking to a smaller 25-bps cut firmed on Thursday following news of slightly higher producer prices andAugust consumer prices data.
While the renewed hopes for a bigger cut were boosting large cap indexes on Friday they were most evident in the Russell 2000 small cap index .RUT. Smaller companies are more sensitive to interest rate changes as they depend more on borrowed money and floating rate loans.
Baird argued that stocks appearedto show investor optimism that a 50 basis point cut would not indicate a coming recession.
"If investors were looking at this and saying they have to move quicker because they're behind the curve you wouldn't see risk assets like small caps rally," said Baird. "You're seeing some of the riskier areas of the equity market advance pretty strongly today."
Jason Pride, chief of investment strategy and research at Glenmede in Philadelphia, said Friday's gains are probably related to Dudley's comment about a strong case for a 50 basis point cut.
According to preliminary data, the S&P 500 .SPX gained 30.05 points, or 0.52%, to end at 5,625.81 points, while the Nasdaq Composite .IXIC gained 111.49 points, or 0.63%, to 17,681.17. The Dow Jones Industrial Average .DJI rose 297.03 points, or 0.72%, to 41,393.80.
A survey showed U.S. consumer sentiment improved in September as inflation subsided, though Americans remained cautious ahead of the November presidential election.
All three major U.S. benchmark indexes were trading near two-week highs, on track to log solid weekly gains.
Adobe ADBE.O sold off sharply after the Photoshop makerforecast fourth-quarter earnings below estimates.
And BoeingBA.N shares sankafter its U.S. West Coast factory workers walked off the job early on Friday as they overwhelmingly rejected a contract deal.
Chinese e-commerce firm PDD Holdings PDD.O fell after the Biden administration said it was moving to curb low-value shipments entering the U.S. duty-free under the $800 "de minimis" threshold.
Uber UBER.N shares rallied after the ride-hailing platform said it would bring autonomous ride hailing to Austin, Texas, and Atlanta in partnership with Alphabet's GOOGL.O Waymo.
Reporting by Sinéad Carew in New York, Shashwat Chauhan and Purvi Agarwal in Bengaluru; Editing by Shounak Dasgupta and Richard Chang
Aset Terkait
Berita Terbaru
Pengungkapan: Entitas XM Group menyediakan layanan khusus eksekusi dan akses ke Fasilitas Trading Online kami, yang memungkinkan Anda untuk melihat dan/atau menggunakan konten yang tersedia pada atau melalui situs, yang tidak untuk mengubah atau memperluas, serta tidak mengubah atau memperluas hal tersebut. Akses dan penggunaan ini selalu sesuai dengan: (i) Syarat dan Ketentuan; (ii) Peringatan Risiko; dan (iii) Pengungkapan Penuh. Oleh karena itu, konten disediakan hanya sebagai informasi umum. Anda juga harus ketahui bahwa konten Fasilitas Trading Online kami bukan sebagai ajakan atau tawaran untuk untuk melakukan transaksi apa pun di pasar finansial. Trading di pasar finansial mana pun melibatkan tingkat risiko yang signifikan pada modal Anda.
Semua materi yang diterbitkan di Fasilitas Trading Online kami hanya untuk tujuan edukasi/informasi dan tidak boleh mengandung nasihat dan rekomendasi finansial, pajak investasi atau trading, catatan harga trading kami, penawaran, permintaan, transaksi dalam instrumen finansial apa pun atau promo finansial untuk Anda yang tidak diminta.
Konten pihak ketiga apa pun, serta konten yang disiapkan oleh XM, seperti opini, berita, riset, analisis, harga, informasi lain atau link ke situs pihak ketiga yang tersedia "sebagaimana adanya", sebagai komentar pasar umum dan bukan menjadi nasihat investasi. Sejauh konten apa pun ditafsirkan sebagai penelitian investasi, Anda harus memperhatikan dan menerima bahwa konten tersebut tidak dimaksudkan dan belum disiapkan sesuai dengan persyaratan hukum yang dirancang untuk mempromosikan kemandirian riset investasi dan dengan demikian akan dianggap sebagai komunikasi pemasaran di bawah hukum dan peraturan yang relevan. Mohon dipastikan bahwa Anda telah membaca dan memahami Notifikasi pada Riset Investasi Non-Independen dan Peringatan Risiko kami mengenai informasi di atas, yang dapat diakses disini.
