The stock market was back to its record-setting ways on Thursday as Wall Street digested the latest economic data in the wake of yesterday’s interest-rate cut.
The Dow Jones Industrial Average rose 124 points, or 0.3%. The S&P 500 was up 0.5%. The Nasdaq Composite was up 0.9%. All three set fresh record closing highs. The Russell 2000 also set an intraday record and was on track for its first closing high since 2021.
The yield on the 2-year Treasury note rose to 3.57%. The 10-year yield was up to 4.1%.
“Crypto, stocks and risk assets in general are experiencing a nice, delayed reaction to yesterday’s 25bps cut,” writes Mizuho’s Daniel O’Regan “As expected, Small caps are outperforming their large cap peers given their Balance Sheet sensitivity.”
Indeed, the top trades on the day included risk, small-caps, and momentum, while bond yields ticked higher after falling in the lead up to this week’s quarter-point cut. Consumer staples was among the few laggards.
Yardeni Research’s Ed Yardeni notes initial jobless claims on Thursday also retreated from the prior week’s spike and the Conference Board’s Index of Coincident Economic Indicators also rose 0.2% in August from July.
“So far, the average of two of the regional business surveys conducted by five of the Fed’s regional banks remained in expansion territory during August, suggesting that the national ISM manufacturing purchasing managers index should be doing the same soon,” Yardeni writes. “This morning’s financial market action suggests that the latest batch of data is showing economic strength that might once again convince Fed officials that there is no rush to lower the FFR again.”