Wall Street’s main stock indexes have advanced as recent economic reports boosted the prospect of monetary policy easing later this year while investors awaited policymakers to offer clues on the timing of the cuts.
Initial claims for state unemployment benefits rose to 221,000 for the week ended March 30 versus an estimate of 214,000 forecast by economists polled by Reuters, indicating a slowing labour market, which supports the Federal Reserve’s target of three rate cuts this year.
The S&P 500 and Nasdaq closed higher in the last session after data showed the US services industry growth slowed further in March.
Statements from Federal Reserve officials, including from chair Jerome Powell, also supported the sentiment.
While policymakers generally agreed that rates could fall later this year, Powell said this would happen only when they “have greater confidence that inflation is moving sustainably down” to the Fed’s 2.0 per cent target.
“With every new release, investors are hoping that the data will support a slowing economy and resultant Fed rate cuts,” said Peter Andersen, founder of Andersen Capital Management.
Equities fell earlier this week following some strong economic reports, including manufacturing activity and job openings data that raised doubts about the three rate cuts widely priced in for the year.
Money markets are indicating a near 60 per cent chance of at least a 25 basis point rate cut in June, according to the CME Group’s FedWatch tool.
Investors will be closely monitoring comments from Fed policymakers, including Richmond Fed President Thomas Barkin, a voting member, and his Cleveland counterpart Loretta Mester, for further clues on the monetary policy, before the key non-farm payrolls data on Friday.
In early trading on Thursday, the Dow Jones Industrial Average was up 278.08 points, or 0.71 per cent, at 39,405.22, the S&P 500 was up 42.35 points, or 0.81 per cent, at 5,253.84, and the Nasdaq Composite was up 159.32 points, or 0.98 per cent, at 16,436.78.
Ten of the 11 major S&P 500 sectors were trading higher, with information technology leading gains, up 1.2 per cent, while rate-sensitive real estate rose about 1.0 per cent.
Most megacap growth stocks edged up in early trading, with Meta Platforms, Amazon.com and Nvidia up between 1.2 per cent and 3.1 per cent.
The Philadelphia Semiconductor Index jumped 1.5 per cent, with Micron Technology amongst the top gainers, rising 1.5 per cent to a fresh record high.
Levi Strauss jumped 16.8 per cent after the apparel maker raised its annual profit forecast, citing savings from its recent cost-cutting measures and fewer discounts.
Online furniture retailer Wayfair advanced 4.4 per cent after Evercore ISI upgraded its rating to “outperform” from “in-line”.
Block fell 3.4 per cent after Morgan Stanley downgraded the payments fintech company to “underweight” from “equal-weight”.
Lamb Weston dropped 12.5 per cent after the frozen goods maker trimmed its full-year revenue and adjusted profit guidance.
Advancing issues outnumbered decliners by a 6.00-to-1 ratio on the NYSE by a 3.68-to-1 ratio on the Nasdaq.
The S&P index recorded 42 new 52-week highs and one new low while the Nasdaq recorded 50 new highs and 17 new lows.