The Dow Jones Industrial Average reached a historic milestone, closing above 45,000 for the first time on Wednesday, while both the S&P 500 and Nasdaq Composite continued their record-breaking runs. This surge occurred as investors evaluated the latest comments from Federal Reserve Chair Jerome Powell.
The Dow increased by 0.7%, settling at 45,014, while the tech-heavy Nasdaq surged by 1.3% to 19,735.1. The S&P 500 also advanced by 0.6%, reaching 6,086.5. Technology stocks led the gains among the sectors, whereas energy stocks experienced the most significant downturn. Powell emphasized the strength of the US economy, suggesting that this robust performance could provide the Federal Open Market Committee with the flexibility to adopt a cautious approach to monetary policy.
"The US economy is in very good shape, and there's no reason for that not to continue," he stated during an event. "The good news is that we can afford to be a little more cautious" in terms of lowering interest rates. Meanwhile, St. Louis Fed President Alberto Musalem indicated that inflation in the US is anticipated to align with the FOMC's long-term target of 2%, asserting that an "additional easing of moderately restrictive policy toward neutral will be appropriate over time." In bond market updates, the US two-year yield dipped by 4.1 basis points to 4.13%, and the 10-year rate decreased by 3.9 basis points to 4.18%.
In terms of economic health, the US services sector showed continued expansion in November, although the rate of growth was reported to be slower sequentially. Conversely, S&P Global reported an acceleration in the sector. Oxford Economics commented, "The (ISM survey) result does not influence our outlook for continued expansion in consumer spending, particularly on the services side, which will keep the economy humming along." Employment growth within the US private sector, however, fell short of Wall Street’s expectations for November, even as wage growth for job stayers marked an increase for the first time in over two years, according to Automatic Data Processing.
The latest Beige Book report from the central bank revealed slight increases in economic activity across most Fed districts, with a moderate rise in the growth outlook evident across various geographies and sectors. In corporate news, Salesforce shares soared nearly 11%, marking it as the top performer on both the S&P 500 and the Dow.
The customer relationship management company reported fiscal third-quarter revenue that exceeded market expectations, driven by strong gains in subscription and support sales. Meanwhile, Marvell Technology emerged as the leading gainer on the Nasdaq, climbing 23% following the release of a favorable fiscal fourth-quarter earnings outlook which also surpassed market estimates in their previous three-month results.
Conversely, Texas Pacific Land shares fell by 12%, the steepest drop among the S&P 500 constituents. Foot Locker faced challenges as it reduced its full-year earnings forecast and reported fiscal third-quarter results that fell below expectations, partially due to weak consumer spending trends and heightened promotional activities, causing its shares to plummet by 8.9%.
In commodity markets, West Texas Intermediate crude oil experienced a decline of 1.8%, settling at $68.68 per barrel, as the Organization of the Petroleum Exporting Countries and its allies are likely to delay a scheduled production increase in response to sluggish demand and concerns of oversupply.
Gold prices saw a modest increase, rising by 0.2% to $2,673.90 per troy ounce, while silver prices also gained, up by 1.1% to $31.84 per ounce..