Stock Market News Today: Markets hit fresh record high on Fed euphoria (SP500)

Wall Street’s three major averages on Thursday scaled fresh intraday record highs, as market participants continued to bask in the aftermath of the Federal Reserve’s second monetary policy decision of the year.

The Fed on Wednesday held interest rates steady for a fifth straight meeting. More notably, its updated dot plot stuck to an outlook of three rate cuts in 2024 and chair Jerome Powell struck a much more dovish tone than expected in his press conference.

By mid-day, the tech-heavy Nasdaq Composite (COMP:IND) had advanced 0.69% to 16,481.85 points, while the benchmark S&P 500 (SP500) had climbed 0.64% to 5,257.81 points. The blue-chip Dow (DJI) surged 0.82% to 39,834.69 points. All three indexes hit new all-time intraday peaks.

All 11 S&P sectors were in the green with the exception of Communication Services.

Treasury yields were mixed. The longer-end 30-year yield (US30Y) was little changed at 4.45%, while the 10-year yield (US10Y) was also flat at 4.28%. The shorter-end more rate-sensitive 2-year yield (US2Y) was up 4 basis points to 4.63%.

See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.

“Yesterday’s market reaction to the (Fed) announcement and subsequent press conference was a complete 180 versus January,” Bespoke Investment Group noted on X (formerly Twitter).

“A gain of 0.89% for the S&P 500 (SP500) was enough to rank as the 14th best single-day performance on a scheduled Fed Day of the 48 since Powell became the chair in March 2018. It was also the 8th best post-decision performance of his tenure,” Bespoke added.

In the central bank’s updated Summary of Economic Projections on Wednesday, officials lifted their growth and inflation forecasts, while dialing back the scope of cuts in 2025 and beyond. Later, Powell in his post-decision press conference was largely benign about the hotter-than-expected inflation readings in January and February, and reiterated that policymakers were likely going to start easing rates this year.

“Chair Powell had the final word today and his overall message was dovish,” JPMorgan’s Michael Feroli said on Wednesday.

“The only notable change to his prepared remarks was to flag potential weakness in the labor market as a cause to cut rates. And in Q&A he took a relaxed attitude to the January-February inflation pop and said that despite those readings the inflation ‘story is really essentially the same.’ So it’s starting to look like, barring some adverse inflation developments, the plan is to start a quarterly tempo of rate cuts beginning in June, consistent with our forecast,” Feroli added.

The updated dot plot’s increased growth targets and reaffirmation of three rate cuts in 2024 also led to a resurgence in expectations that the Fed would be able to deliver a soft landing.

On Thursday, data on housing and manufacturing supported the soft landing hopes by pointing to economic strength. Before the opening bell, the Philadelphia Fed’s monthly survey showed that manufacturing activity in that region continued to expand overall. Later, shortly after the start of regular trading, S&P Global said that U.S. business activity continued to rise in March amid a market upturn in manufacturing production.

Additionally, U.S. existing home sales came in, with the total number bouncing 9.5% in February to 4.38M, significantly outstripping the consensus estimate of 3.95M and accelerating from January’s 4.00M figure.

Finally, the U.S. leading indicator index increased 0.1% in February, its first positive reading in nearly two years. The index has long been seen as a recession bellwether, however its divergence over the last 23 months from an economy that is clearly robust had called that status into question.

Turning to active stocks, Apple (AAPL) stock slipped nearly 4% and was among the top percentage losers on all three major indexes. The company was sued by the U.S. Department of Justice in a landmark antitrust case alleging abuse of its iPhone monopoly.

Investors will also be closely watching Reddit’s (RDDT) hotly-anticipated market debut. The company is set to open on the New York Stock Exchange in what will be the biggest initial public offering for a social media firm since 2019.