Interest Rate Optimism May Lead To Continued Strength On Wall Street
14 Outubro 2024 - 10:08AM
IH Market News
The major U.S. index futures are currently pointing to a
modestly higher open on Monday, with stocks likely to add to the
strong gains posted in the previous session.
Stocks may continue to benefit from optimism about the outlook
for interest following last Friday’s report on producer price
inflation.
While hopes the Federal Reserve will lower rates by another 50
basis points next month have largely evaporated, the data
reinforced optimism the central bank will cut rates by 25 basis
points.
Overall trading activity is likely to be relatively subdued,
however, with some traders likely to be away from their desks due
to the Columbus Day holiday.
A lack of major U.S. economic data may also keep some traders on
the sidelines ahead of the release of key reports on retail sales
and industrial production later in the week.
Earnings news from big-name companies, such as Bank of America
(NYSE:BAC), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), Johnson
& Johnson (NYSE:JNJ), UnitedHealth (NYSE:UNH), Morgan Stanley
(NYSE:MS) and Netflix (NASDAQ:NFLX), is also likely to attract
attention in the coming days.
Following the modest pullback seen in Thursday’s session, stocks
showed a strong move back to the upside during trading on Friday.
The major averages more than offset Thursday’s losses, with the Dow
and the S&P 500 reaching new record closing highs.
The major averages pulled back off their best levels going into
the close but remained firmly positive. The Dow jumped 409.74
points or 1.0 percent to 42,863.86, the S&P 500 climbed 34.96
points or 0.6 percent to 5,815.03 and the Nasdaq rose 60.89 points
or 0.3 percent to 18,342.94.
For the week, the Dow surged by 1.2 percent, while the Nasdaq
and the S&P 500 both shot up by 1.1 percent.
The strength on Wall Street partly reflected a positive reaction
to a Labor Department report showing producer prices in the U.S.
were unexpectedly unchanged in September.
The Labor Department said its producer price index for final
demand came in flat in September after rising by 0.2 percent in
August. Economists had expected producer prices to inch up by 0.1
percent.
The report also said the annual rate of growth by producer
prices slowed to 1.8 percent in September from an upwardly revised
1.9 percent in August.
Economists had expected the annual rate of producer price growth
to dip to 1.6 percent from the 1.7 percent originally reported for
the previous month.
“After an upside surprise from the September CPI report,
producer prices came in below expectations and provide support for
a 25bps rate cut in November,” said Matthew Martin, Senior U.S.
Economist at Oxford Economics.
Traders also reacted positively to earnings news from big-name
banks, with shares of Wells Fargo (NYSE:WFC) surging by 5.6 percent
after the company reported better than expected third quarter
earnings.
JPMorgan Chase (NYSE:JPM) also jumped by 4.4 percent after
reporting third quarter results that exceeded analyst estimates on
both the top and bottom lines.
Meanwhile, a steep drop by shares of Tesla (NASDAQ:TSLA) limited
the upside for the Nasdaq, with the electric vehicle maker plunging
by 8.8 percent amid a negative reaction to its long-awaited
robotaxi event.
Banking stocks saw substantial strength on the upbeat earnings
news from Wells Fargo and JPMorgan, driving the KBW Bank Index up
by 3.0 percent to its best closing level in over two years.
Significant strength was also visible among transportation
stocks, as reflected by the 2.1 percent surge by the Dow Jones
Transportation Average.
Brokerage stocks also showed a strong move to the upside on the
day, with the NYSE Arca Broker/Dealer Index climbing by 1.7
percent.
Biotechnology, computer hardware and natural gas stocks also saw
notable strength, moving higher along with most of the other major
sectors.
Morgan Stanley (NYSE:MS)
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