U.S. stock markets closed higher on Wednesday, maintaining the rally for four consecutive days. Market participants remained hopeful of another possible interest rate cut next month. Strong economic data boosted investors’ sentiments. All three major stock indexes ended in positive territory.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) advanced 0.7% or 314.67 points to close at 47,427.12. Notably, 21 components of the 30-stock index ended in positive territory, while nine finished in negative territory.
The tech-heavy Nasdaq Composite finished at 23,214.69, rising 0.8% or 189.01 points on the strong performance of artificial intelligence bigwigs. The major gainer of the tech-laden index was AppLovin Corp. APP. The stock price of this AI-powered technology services giant surged 5.5%. %. AppLovin currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 gained 0.7% points to finish at 6,812.61. 10 out of 11 broad-sectors of the broad-market index ended in positive territory while one ended in negative territory. The Materials Select Sector SPDR (XLB), the technology Select Sector SPDR (XLK), the Utilities Select Sector SPDR (XLU) and the Consumer Staples Select SPDR (XLP), increased 1.2%, 1.3%, 1.3% and 1%, respectively.
The fear gauge, the CBOE Volatility Index (VIX) was down 7.4% to 17.19. A total of 14.78 billion shares were traded on Wednesday, lower than the last 20-session average of 19.49 billion. Advancers outnumbered decliners on the NYSE by a 3.37-to-1 ratio. On the Nasdaq, a 2.13-to-1 ratio favored advancing issues.
Rate Cut Hope Remains High
On Nov. 25, Bloomberg reported that White House National Economic Council Director Kevin Hassett has emerged as a key contender for the next Fed Chairman. CNBC reported citing Treasury Secretary Scott Bessent that chances are very high that President Trump will announce the name of the next Fed Chair before Christmas.
Hasset is known for his strong view of a low-interest-rate regime. Bank of America economist Aditya Bhave believes that the Fed fund rate could be lowered as low as below 3% if Hasset becomes the next Fed Chairman. On Nov. 24, San Francisco Federal Reserve President Mary Daly and on Nov. 21, New York Federal Reserve President John Williams supported the rate cut in December citing weak labor market conditions.
Following these developments, the CME FedWatch interest rate derivative tool currently shows an 85% probability of a 25-basis-point rate cut in December. This probability was as low as 42% last week.
Economic Data
For the week ended Aug. 21, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.8 million barrels from the previous week.
The Department of Labor reported that initial claims decreased 6,000 to 216,000 for the week ended Nov.22, lower than the consensus estimate of 229,000. The previous week’s data was revised upward to 222,000 from 220,000 reported earlier.
Continuing claims (those who have already received government aid and reported a week behind) increased 7,000 to 1.96 million for the week ended Nov. 15. The previous week’s data was revised downward by 21,000 to 1.974 million from 1.953 million reported earlier.
The Department of Commerce reported that orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, rose 0.5% in September, missing the Zacks Consensus Estimate of 2.2%. The metric for August was revised upward to 3% from 2.9% reported earlier.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 0.9% in September after an upwardly revised 0.9% increase in August. Shipments of core capital goods increased 0.9% in September after declining 0.1% in August.
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AppLovin Corporation (APP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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