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Favorable Market Response to Anticipated Rate Cuts
The S&P 500 surged to a historic peak Thursday, bolstered by the tech industry, following Federal Reserve Chairman Jerome Powell’s reaffirmation of impending rate reductions this year. This announcement has led to a positive investor outlook, with an expectation that global central banks will begin implementing less stringent monetary policies from June.
By 18:58 GMT (13:58 ET), the Dow Jones Industrial Average had climbed by 216 points (0.6%), while the S&P 500 increased by 1.2%, reaching a record-breaking peak of 5,165.53 points. Concurrently, the NASDAQ Composite experienced a 1.2% hike.
Powell and the ECB Signal Upcoming Rate Cuts
During his second day of congressional testimony, Fed Chairman Jerome Powell noted that the Federal Reserve is "within reach" of the certainty needed to decrease interest rates this year - a sentiment reflecting his comments from the previous day.
After the European Central Bank's decision to maintain steady interest rates yet lower its inflation predictions, excitement is building around a potential ease in rates by major global central banks as early as June.
The news prompted a surge in European government bonds, which typically behave contrarily to yields, resulting in a dip in short-term U.S. Treasury yields. Consequently, the yield on the 2-year Treasury dropped by 4 basis points, landing at 4.52%.
Stock Market Highlights: Victoria's Secret Declines & Kroger Soars
Kroger (NYSE:KR) stock witnessed a 9% rise after the grocery chain predicted above-expectation annual sales and profits due to heightened in-store grocery demand driven by continued inflation.
Conversely, Victoria's Secret (NYSE:VSCO) shares plummeted by 31% after the lingerie merchant projected weaker yearly sales following a lackluster start to the year, largely because North American shoppers have been seeking more cost-effective alternatives.
Cybersecurity enterprise OneSpan (NASDAQ:OSPN) enjoyed a 23% boost due to above-consensus quarterly earnings, and American Eagle Outfitters (NYSE:AEO) saw a 3% rise after exceeding Wall Street's Q4 forecasts. The apparel retailer experienced a successful festive shopping season as shoppers gravitated towards full-price items.
New York Community Bancorp's Return Journey Continues
Following previous gains, New York Community Bancorp (NYSE:NYCB) saw a further 7% rise after Fitch Ratings affirmed the property lender's rating at BB+, acknowledging the recent $1 billion cash infusion.
It was announced on Wednesday that New York Community Bancorp had secured just over $1 billion by selling stock and warrants at $2 per share to a group of investors. While this deal provides essential liquidity amid concerns about the bank's exposure to shaky real estate loans, Wedbush declared it to be "extremely dilutive to common shareholders".
Jobs Report Holds Investor Focus
With the stagnation in new unemployment claims at 217,000, signs indicate a further easing in the labor market just before the crucial non-farm payrolls report release.
January reported a drop of 26,000 in U.S. job openings, with a dip in hiring as labor market conditions continue to slowly relax. All eyes are now on the upcoming nonfarm payroll report anticipated for Friday, which will provide additional insights into the strength of the U.S. economy.
