How did benchmarks fare?
The S&P 500 index SPX, +0.95% added 27.72 points, or 1%, to 2,954.18, after earlier touching a new intraday peak of 2,958.06.
The Dow Jones Industrial Average DJIA, +0.94% rose 249.17 points, or 0.9%, to 26,753.17, coming about 75 points short of its record set on Oct. 3. The Nasdaq Composite Index COMP, +0.80% climbed 64.02 points, or 0.8%, to 8,051.34, the first time it finished above 8,000 since May 6.
What drove the market?
Markets rallied after Federal Reserve Chairman Jerome Powell on Wednesday signaled that the central bank may cut benchmark interest rates, currently at a range of 2.25%-2.50%, in the coming weeks if the economic outlook buffeted by U.S.-China trade tensions doesn’t show signs of improvement.
“The case for somewhat more accommodative policy has strengthened,” Powell said at a news conference to discuss the rate-setting Federal Open Market Committee’s highly anticipated decision. Policy makers kept rates unchanged as expected but removed the word “patient” from its updated policy statement, suggesting that it is ready to act soon.
Although markets have been widely anticipating that the Fed would respond to growing signs of stress in the economy, the central bank’s posture on looser monetary policy was seen as providing a strong case for the continued rise in stocks despite concerns.
The Fed next meets July 30-31, while President Donald Trump is expected to speak to Chinese President Xi Jinping on the sidelines of the coming Group of 20 meeting of the world’s richest countries in Japan next week where a detente on trade could be reached.
Geopolitical tensions partly dampened the market’s upbeat mood as President Donald Trump acknowledged the possibility of increased hostilities with Iran after the Islamic country shot down a U.S. drone. The president tweeted earlier that Iran “made a very big mistake” and said, “you’ll soon find out” if the U.S. decides to strike back.
Meanwhile, dovish rhetoric from central-bank policy makers across the globe this week has helped to send commodity prices, particularly gold, rocketing higher with heightened expectation that interest rates, which can undercut appetite for bullion, will be lowered.
Bank of Japan Gov. Haruhiko Kuroda and the Bank of England on Thursday joined the chorus of bankers including Powell and European Central Bank President Mario Draghi, signaling a readiness to increase stimulus should global risks, partly spurred by trade, worsen.
Key data drivers
The Philadelphia Fed manufacturing index in June fell to 0.3 after registering a four-month high of 16.6 in May. Any reading above zero indicates improving conditions. Economists polled by MarketWatch expected an 8 reading.
Initial jobless claims, a rough way to measure layoffs, fell by 6,000 to 216,000 in the seven days ended June 15, the government said.
The U.S. current-account deficit, a measures of the nation’s debt to other countries, fell 9.4% in the first quarter mostly because of a smaller deficit in goods. The current-account deficit shrank to $130.4 billion from a revised $143.9 billion in the fourth quarter.
What were strategists saying?
“Powell’s press conference [on Wednesday] showed some reluctance, but it seems markets are certain the Fed will cut in July. If data deterioration is worst than expected, calls for a 50-basis cut at the July meeting will grow in the coming weeks,” wrote Edward Moya, senior market analyst at Oanda in a daily research note.
Colin Cieszynski, chief market strategist at SIA Wealth Management, said although the consensus in the market is that the Fed could lower interest rates as early as next month, the fact that it didn’t take action this week bolstered confidence as a precipitated rate cut could have panicked investors.
Which stocks were in focus?
Slack Technologies Inc. WORK, +1.14% shares surged 49% to $38.62 a share on the enterprise software company’s debut on the New York Stock Exchange, significantly above its reference price of $26. Slack opted for a direct listing of its shares instead of an initial public offering.
Shares of Oracle Corp. ORCL, -0.11% rallied 8.2% after the software company reported better-than-expected earnings and an upbeat outlook.
Akero Therapeutics Inc. AKRO, +14.50% shares jumped 15% to $18.32 on the biotechnology firm’s first day of trading as a public company. Akero priced its shares at $16 for its initial public offering.
How did other assets trade?
Asian stocks rose with Hong Kong’s Hang Seng Index HSI, +1.23% up 1.2%, China’s Shanghai Composite Index SHCOMP, +2.38% rallied by 2.4%, and Japan’s Nikkei 225 NIK, +0.60% closed up 0.6%. In Europe, the Stoxx Europe 600 SXXP, +0.36% gained 0.4%.
Gold futures GCQ19, +3.15% surged 3.6% to settle at their highest since September 2013, while the 10-year Treasury note TMUBMUSD10Y, +0.21% fell to 2%, and the U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, -0.46% dropped 0.5%. Crude-oil prices CLU19, +5.98% surged nearly 6% amid geopolitical tensions in the Middle East.
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