S&P 500 rises to new record, buoyed by Fed interest rate cut
Stocks on Wall Street rose broadly Wednesday, sending the Standard & Poor’s 500 index to a new record high for the second time this week, as investors welcomed the Federal Reserve’s decision to cut interest rates again.
The nation’s central bank also indicated that it won’t lower rates further in the coming months unless the economic outlook worsens. The Fed has been using its power to cut short-term interest rates in a bid to shore up the economy amid the costly effects of the U.S.-China trade war.
Stocks wobbled shortly after the Fed’s announcement, which had been widely anticipated by traders. The market then rallied into the close, led by gains in technology and healthcare stocks. Bond yields fell.
“The rate cut was expected, and also the market had been expecting a change in the language regarding another rate cut this year,” said Quincy Krosby, chief market strategist at Prudential Financial. “The Fed just basically upped the bar for another rate cut by suggesting that the economy is in a good place.”
The S&P 500 index rose 9.88 points, or 0.3%, to 3,046.77, beating the record high it set Monday.
The Dow Jones industrial average rose 115.27, or 0.4%, to 27,186.69. The Nasdaq composite rose 27.12 points, or 0.3%, to 8,303.98.
The Russell 2000 index of smaller-company stocks fell 4.23 points, or 0.3%, to 1,572.85.
In addition to the interest rate news Wednesday, the Commerce Department said the U.S. economy slowed to a modest growth rate of 1.9% in the July-through-September quarter. That surpassed economists’ forecasts for even weaker growth, however.
The report indicated that consumer spending downshifted and businesses continued to trim their investments in response to uncertainty caused by the trade war and a weakening global economy.
Technology and healthcare companies drove much of the market’s broad gains Wednesday. Microsoft rose 1.3%. Johnson & Johnson climbed 2.9%.
Energy stocks took the heaviest losses. Chevron slid 1.5%. Helmerich & Payne fell 4.3%. The sector dropped 2.1%, lowering its gains for the year to just 1.1%. That’s the smallest gain of all the sectors in the S&P 500.
Several big banks helped drag down financial sector stocks as bond yields declined. The yield on the 10-year Treasury note dropped to 1.77% from 1.83%. The yield is a benchmark for interest rates that banks charge for mortgages and other loans. JPMorgan shares fell 0.6%. Bank of America slid 1.4%.
Investors also continued to focus on a steady flow of corporate earnings.
Apple, Facebook and Lyft climbed in after-hours trading after reporting quarterly results that beat Wall Street’s forecasts. Twitter slumped after the social media company announced it is banning political ads from its service.
Mattel surged 13.8% after the toy maker breezed past Wall Street’s third-quarter profit forecasts on strong sales of its Barbie and Hot Wheels brands. The company also put investors at ease when it said that it hasn’t seen any impact from tariff increases on toys imported from China ahead of the Dec. 15 deadline.
General Electric jumped 11.5% after the industrial conglomerate raised its projections for a key measure of profitability despite the trade war and ongoing problems with Boeing’s 737 Max, whose engines GE helps make.
Molson Coors Brewing fell 3.1% after announcing a restructuring plan as it faces declining beer sales. The company is laying off 500 workers worldwide as it streamlines operations in a bid to bring new products to market more quickly, such as the canned wine and hard coffee it introduced this year.
Benchmark crude oil fell 48 cents to settle at $55.06 a barrel. Brent crude oil, the international standard, dropped 98 cents to close at $60.61 a barrel.
In other commodities trading, wholesale gasoline fell 3 cents to $1.66 a gallon. Heating oil declined 5 cents to $1.91 a gallon. Natural gas rose 5 cents to $2.69 per 1,000 cubic feet.
Gold rose $5.80 to $1,493.20 an ounce. Silver rose 4 cents to $17.82 an ounce. Copper fell 1 cent to $2.68 a pound.
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