Wall Street rises as Fed rate-hike concerns alleviate

By Shristi Achar A and Shashwat Chauhan

(Reuters) – Wall Street’s main indexes advanced on Thursday, a day after the Federal Reserve left interest rates unchanged and allayed worries around potential rate hikes, with focus moving to a crucial job report later in the week.

While Fed Chair Jerome Powell indicated that stubbornly high inflation would see a long-expected U.S. rate cut pushed back, he refused to entertain talk that rates might actually need to go up again.

Money markets see a 58% chance of the first rate cut of at least 25 basis points (bps) being delivered in September, but have priced in a greater 68.4% chance of a cut in November, according to CME FedWatch tool.

“The outcome of the (Fed) statement, plus the press conference was for slightly more rate cuts to be priced in, not necessarily sooner, but by the end of the year,” said Brian Nick, senior investment strategist at the Macro Institute.

On Wednesday, U.S. stocks initially rose, but the S&P 500 and the Nasdaq closed lower for the day after the Fed decision.

Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low level last week, pointing to a still fairly tight labor market.

A separate reading showed new orders for U.S.-manufactured goods rose 1.6% in March, in line with expectations of economists polled by Reuters.

Focus now moves to the key nonfarm payrolls data on Friday for a clearer outlook on the labor market and the interest rate path.

Of the 310 companies in the S&P 500 that have reported earnings as of Wednesday, 77.4% have surpassed earnings estimates, compared with the historical average of 67%, according to LSEG data.

At 10:01 a.m. ET, the Dow Jones Industrial Average rose 69.56 points, or 0.18%, to 37,972.85, the S&P 500 gained 5.60 points, or 0.11%, to 5,023.99, and the Nasdaq Composite gained 51.79 points, or 0.33%, to 15,657.28.

Seven of the 11 major S&P 500 sectors were trading higher, with information technology and consumer discretionary stocks among top gainers.

Apple gained 1.1% ahead of the iPhone maker’s quarterly results due after the closing bell.

Qualcomm gained nearly 9% after the smartphone chips supplier forecast quarterly sales and adjusted profit above Wall Street expectations.

Carvana surged 35.5% as the used-car seller forecast a surprise rise in current-quarter retail sales and core profit.

MGM Resorts added 3.3% after the casino operator beat first-quarter Wall Street estimates, driven by strength in its China operations.

DoorDash lost 13.3% as the food delivery firm projected second-quarter core profit below estimates.

Etsy shed 16.3% after the online marketplace missed Wall Street expectations for first-quarter gross merchandise sales and profit.

Advancing issues outnumbered decliners for a 1.84-to-1 ratio on the NYSE and a 1.36-to-1 ratio on the Nasdaq.

The S&P 500 posted ten new 52-week highs and five new lows, while the Nasdaq recorded 40 new highs and 42 new lows.

(Reporting by Shristi Achar A and Shashwat Chauhan in Bengaluru; Editing by Shounak Dasgupta)