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A tech rally boosted US stocks on Wednesday, with all three major indexes hitting new record closes, as investors digested Federal Reserve Chair Jerome Powell’s comments that US economy is in “remarkably good shape.”
The Dow Jones Industrial Average (^DJI) climbed about 0.7%, or over 300 points, to close above 45,000 for the first time ever. Meanwhile the S&P 500 (^GSPC) added roughly 0.6% for a fresh closing high of 6,086.49. The tech-heavy Nasdaq Composite (^IXIC) added 1.3%, clinching a record of its own at 19,735.12.
Cloud and e-commerce giant Amazon (AMZN) hit intraday all-time highs on Wednesday, as did iPhone maker Apple (AAPL). AI chip darling Nvidia (NVDA) gained over 3%, nearing its own record. Salesforce (CRM) stock surged 11% after the software maker’s quarterly revenue beat boosted hopes for its artificial intelligence products.
Markets kept moving higher as Powell spoke at the New York Times DealBook Summit and did little to shake investor confidence that the Fed will cut interest rates at its December meeting. Powell touted a US economy in “remarkably good shape” as a reason he feels the Fed can be “afford to be a little more cautious” in its interest rate cutting path.
The central bank is widely expected to lower rates at its Dec. 18 meeting. Traders see near 77% odds of a 25 basis point cut, compared with around 67% a week ago, per the CME FedWatch tool.
On that economic strength: A reading on private payrolls suggested the labor market is softening — but not too much. The report is one of several key economic releases this week, leading into the all-important monthly jobs report on Friday.
In corporate news, UnitedHealth Group (UNH) halted its investor day after the CEO of insurance unit UnitedHealthcare, Brian Thompson, was fatally shot in Manhattan on Wednesday morning.
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Bitcoin nears $100,000
All three major indexes clinched fresh record highs on Wednesday while bitcoin (BTC-USD) headed for a milestone of its own.
The world’s largest cryptocurrency quickly gained steam in the afternoon, nearly touching $100,000 per coin for the first time ever, as investors digested President-elect Donald Trump’s nomination for chair of the Securities and Exchange Commission. Bitcoin’s prior all-time high is $99,655.50 per coin.
Trump officially announced the nomination of Paul Atkins, who is seen as a pro-cryptocurrency official. The former SEC chair under the George W. Bush administration currently serves on the advisory board for digital securities issuance platform Securitize.
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A sign the labor market might still be a ‘little tight’
The labor market has showed signs of further cooling in the second half of 2024. But there have still be an occasional signs of labor market tightness within data, as seen in a Wednesday release from ADP.
New data from ADP released Wednesday showed that the median year-over-year pay increase for job switchers rose to 7.2% in November, up from 6.7% in October. Meanwhile, the year-over-year pay increase for job stayers rose to 4.8% from 4.7% the month prior, marking the first monthly increase in wage growth for job stayers in 25 months.
“Job changers are the most sensitive to real time labor market conditions,” ADP chief economist Nela Richardson told Yahoo Finance. “So if they’re getting paid a little bit more in November than they did in October, that tells you that there’s a labor market out there that’s still a little tight. And that is meaningful to the fed.”
Specifically, Richardson added, it could be a challenge for a Fed that’s already been digesting inflation prints that have shown little progress in recent months.
“As long as you have sticky inflation and strong wage growth, you can’t be on a preset course to cutting rates, because that could come and bite you later,” Richardson said. “So I think they’re still going to be very cautious, very data dependent.”
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Big tech leading market higher
A rally in megacap tech helped lift US equities on Wednesday.
Nvidia (NVDA) rallied more than 3% while Amazon (AMZN) popped more than 2%. All of the so-called “Magnificent Seven” tech stocks have outperformed the S&P 500 (^GSPC) this week, with each stock rising more than 2% in the past three trading days compared to the benchmark index’s less than 1% gain.
We recently highlighted that these stocks have also been seeing stronger earnings revisions over the past month compared to the S&P 500, perhaps one of the driver’s behind the recent market action.
“US Big Tech names have solid earnings estimate momentum, and they are much better off than the S&P as a whole as well as its top 10 non-Tech holdings,” DataTrek co-founder Jessica Rabe wrote in a recent note.
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Powell: Fed can be a ‘little more cautious’ cutting interest rates
Federal Reserve Chair Jerome Powell said Thursday that recent economic data could lead to a “cautious” interest rate-cutting cycle.
In an interview at the New York Times DealBook Summit, Powell said the US economy is in “remarkably good shape.” Given that, and how recent data has calmed concerns over how rapidly the US labor market is weakening, Powell believes the Fed won’t need to rapidly cut interest rates while the central bank waits for inflation to fall to its 2% goal.
“We can afford to be a little more cautious as we try to find neutral,” Powell said.
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Wall Street is betting on a strong US economy in 2025
Over the past few years, a stronger-than-expected US economy has continuously surprised Wall Street and its projections.
While we’ve become somewhat used to them now, the recent underestimations are a reversal of what was seen prior to the pandemic when US economic forecasts were often too lofty, RBC Capital Markets head of US equity strategy Lori Calvasina told Yahoo Finance.
And now, heading into 2025, strategists like Calvasina are leaning into the post-pandemic trend and betting consensus economic forecasts will once again be surprised to the upside by the US economy.
“Given that history recently of underestimating [US economic growth] and the fact that GDP forecasts for next year are creeping up very, very, very slowly, I’m making a bet on the 2% to 3% [growth] instead of the 1% to 2%,” said Calvasina, who sees the S&P 500 ending next year at 6,600.
On Tuesday, Wells Fargo’s Christopher Harvey issued the most bullish target on Wall Street at 7,007 while highlighting a “cyclical opportunity catalyzed by upward GDP revisions.”
If 2024’s market driving abbreviation was AI, 2025’s is set to be GDP.
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Trump nominates Paul Atkins for next SEC chair
President-elect Donald Trump officially announced the nomination of Paul Atkins as the next chair of the Securities and Exchange Commission on Wednesday.
Atkins, currently the CEO at Patomak Global Partners, served as SEC chair under the George W. Bush administration from 2002 to 2008. Unlike his potential predecessor Gary Gensler, who is set to leave office in January 2025, Atkins is seen as a pro-cryptocurrency official and currently serves on the advisory board for digital securities issuance platform Securitize.
“He’s certainly a person that is known for streamlining regulation and being very pro-digital assets, and very knowledgeable in the industry,” Carlos Domingo, the founder and CEO of Securitize, told Yahoo Finance on Wednesday.
Bitcoin (BTC-USD) moved slightly higher on the news and was trading just north of $96,000 per coin in afternoon trade.
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Nasdaq, S&P 500 hover near record highs as tech leads gains
The S&P 500 (^GSPC) and tech-heavy Nasdaq Composite (^IXIC) touched intraday record highs on Wednesday as markets edged higher, buoyed by tech stocks.
The S&P 500 Tech sector (XLK) outperformed, jumping about 1.3%.
The Dow Jones Industrial Average (^DJI) also climbed after a strong quarterly report from software maker Salesforce (CRM).
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UnitedHealth: ‘Deeply saddened and shocked’ by passing of executive Brian Thompson
UnitedHealth Group (UNH) released a statement Wednesday following the fatal shooting in Manhattan of Brian Thompson, the CEO of UnitedHealthcare.
“We are deeply saddened and shocked at the passing of our dear friend and colleague Brian Thompson,” read the company statement.
“Brian was a highly respected colleague and friend to all who worked with him. We are working closely with the New York Police Department and ask for your patience and understanding during this difficult time. Our hearts go out to Brian’s family and all who were close to him.”
Thompson was shot outside the Hilton hotel in Midtown Manhattan, where the company was holding its investor day.
UnitedHealth halted the event this morning following the shooting.
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Trump picks Peter Navarro as senior counselor for Trade and Manufacturing
President-elect Donald Trump has asked Peter Navarro to be senior counselor for Trade and Manufacturing.
Navarro served under Trump’s first term as White House trade adviser.
“I am pleased to announce that Peter Navarro, a man who was treated horribly by the Deep State, or whatever else you would like to call it, will serve as my Senior Counselor for Trade and Manufacturing,” wrote Trump on social media platform Truth Social on Wednesday.
“During my First Term, few were more effective or tenacious than Peter in enforcing my two sacred rules, Buy American, Hire American,” wrote Trump.
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Amazon hits all-time high as Wall Street reaffirms bullish view on AI cloud capabilities
Amazon (AMZN) hit an all-time high on Wednesday amid the company’s AWS re:Invent 2024 cloud conference. Shares of the e-commerce and cloud giant rose more than 2% in early trading.
On Wednesday, numerous Wall Street analysts reaffirmed their bullish Buy ratings on the stock, citing the company’s artificial intelligence capabilities.
The stock has 77 Buy ratings, 5 Holds, and zero Sells.
Amazon shares are up 43% year to date.
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Foot Locker stock tumbles 12% as retailer cuts guidance, says spending trends ‘softened’
Foot Locker (FL) shares tumbled 12% in early trading after the footwear retailer cut its full-year guidance while missing third quarter estimates, citing weak consumer demand.
“Consumer spending trends softened following the peak Back-to-School period in August, and the promotional environment was more elevated than anticipated,” the company said in its quarterly release.
The stock is down more than 30% year to date.
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Stocks rise as tech leads, Salesforce jumps
US stocks edged higher on Wednesday, as tech rose, led by shares of Salesforce (CRM).
The Dow Jones Industrial Average (^DJI) climbed 0.4%, or around 200 points, while the S&P 500 (^GSPC) added 0.3% on the heels of an all-time closing high. The tech-heavy Nasdaq Composite (^IXIC) gained 0.7%.
Salesforce (CRM) stock climbed around 8% in early trading after the software maker’s quarterly revenue beat boosted hopes for its AI products.
Investors await Fed Chair Jerome Powell’s appearance in New York on Wednesday afternoon. Investors will be looking for clues from his commentary about the direction of Fed policymakers’ next interest rate move. The last Fed rate policy meeting of the year is slated for Dec. 18.
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Good morning. Here’s what’s happening today.
Economic data: MBA Mortgage Applications (week ended Nov. 29); ADP Private Payrolls (November); S&P Global US Services PMI & US Composite PMI (November final); ISM Services index (November); ISM Services prices paid (November); Factory orders & Durable goods orders (October final)
Earnings: American Eagle Outfitters (AEO), Campbell’s (CPB), ChargePoint (CHPT), Chewy (CHWY), Cracker Barrel (CBRL), Dollar Tree (DLTR), Five Below (FIVE), Foot Locker (FL), Hormel Foods (HRL), RBC (RBC), Victoria’s Secret (VSCO)
Here are some of the biggest stories you may have missed overnight and early this morning:
Why Wall Street is betting on a strong economy in 2025
GM to take over $5B hit on China operations
Wells Fargo makes the most bullish 2025 S&P forecast yet
EU probes Nvidia hardware bundling amid Run:ai deal scrutiny
Marvell stock surges amid AI boost to Q4 revenue forecast
Stellantis chairman to pick Apple CFO Maestri as carmaker’s new CEO
Small caps should shine until the dollar ‘wrecking ball’ hits
