Wall Street ends higher, S&P 500, Nasdaq approach record highs on rising rate cut hopes
Wall Street closed higher on Thursday, nudging the S&P 500 and the Nasdaq nearer to record closing highs as the Israel-Iran cease-fire continued to hold and a raft of economic indicators appeared to support the case for the U.S. Federal Reserve lowering borrowing costs this year.
A broad rally pushed all three major U.S. stock indexes higher, placing them on track for weekly gains.
The S&P 500 and the Nasdaq are now within striking distance of all-time closing highs, while the Nasdaq 100, a subset of the Nasdaq Composite, notched its second consecutive record closing high on Wednesday.
Bank stocks outperformed after the Fed unveiled a proposal to relax its leverage rules, which would ease the capital big banks are required to hold against relatively low-risk assets.
Richmond Fed President Thomas Barkin cautioned against taking options off the table amid ongoing economic uncertainty, but added that he did not expect tariffs to be "as inflationary as a lot of people worry about."
A muted tariff effect could help make the case for a rate cut this fall, according to San Francisco Fed President Mary Daly. Boston Fed President Susan Collins said on Wednesday she's leaning toward a rate cut later this year amid an uncertain economic outlook.
These remarks follow Fed Chair Jerome Powell's two-day congressional testimony, at which he reiterated the central bank's wait-and-see policy stance with respect to rate cuts and economic tariff effects.
Financial markets are currently pricing in nearly a 21% likelihood of a 25 basis point reduction the Fed Funds target rate at the July Fed meeting, and more than a 75% probability that this year's first rate cut will come in September, according to CME's FedWatch tool.
According to preliminary data, the S&P 500, gained 49.93 points, or 0.82%, to end at 6,142.09 points, while the Nasdaq Composite, gained 195.48 points, or 0.98%, to 20,169.03. The Dow Jones Industrial Average, rose 414.33 points, or 0.96%, to 43,396.76.
Source : Reuters
