The US benchmark equity indexes exhibited positive movement in intraday trading as market participants eagerly anticipated the Federal Reserve's forthcoming monetary policy decision scheduled for next week. The Dow Jones Industrial Average and the Nasdaq Composite each experienced an increase of 0.8%, reaching milestone figures of 41,439.8 and 17,706.1, respectively, as midday approached on Friday.
The S&P 500 also saw a rise of 0.7%, climbing to 5,632.5. Notably, all sectors were positive, with materials and utilities sectors leading the charge. Current market analyses suggest a nearly 53% probability that the Federal Open Market Committee (FOMC) will opt to reduce the benchmark lending rate by 25 basis points during the upcoming meeting.
The remaining odds seem to favor a more aggressive approach, potentially leading to a 50-basis-point reduction. This is based on insights from the CME FedWatch tool, which provides real-time probabilities for monetary policy shifts. Jefferies, a notable financial services company, has projected that policymakers are likely to deliver a 25-basis-point rate cut.
The firm articulates that the language in the policy statement is expected to change considerably, indicating a shift in the balance of risks leaning towards the downside for the labor market. Furthermore, there is newfound confidence in achieving the FOMC's 2% inflation goal over a measured time frame.
Jefferies elaborated that this decision will pave the way for potential additional rate cuts in upcoming meetings, marking a significant shift in monetary policy directions. Concerning yields, the US two-year yield observed a decline of 7.2 basis points, settling at 3.58% during intraday trading, while the 10-year rate fell by 3.2 basis points to arrive at 3.65%.
These movements indicate a cautious investor sentiment in focus ahead of the anticipated central bank decisions. In corporate news, Warner Bros. Discovery ($WBD) emerged as one of the most significant winners, with shares increasing by 9.2%, making it the top performer on both the S&P 500 and the Nasdaq indexes.
The company announced a multiyear distribution agreement with Charter Communications ($CHTR) aimed at integrating both linear video and streaming services, a move perceived positively by investors. Charter's shares reflected this sentiment, climbing 1.4% during Friday’s trading. Conversely, Boeing ($BA) saw a marked decline, experiencing the steepest drop on the Dow with a decrease of 3.7%.
This downturn followed the rejection of a tentative labor agreement by members of the International Association of Machinists and Aerospace Workers, creating uncertainty about future labor relations for the aircraft manufacturer. Furthermore, shares of Adobe ($ADBE) experienced a steep decline of 9.1%, marking it as the worst performer on the S&P 500 and Nasdaq indices.
Despite reporting stronger-than-expected third-quarter results, Adobe's fiscal fourth-quarter revenue outlook fell short of analysts’ expectations, raising concerns among investors. In commodities, West Texas Intermediate crude oil prices eased by 0.3%, pricing at $68.80 per barrel during the intraday assessment. Economic data revealed that US consumer sentiment saw a more significant increase than previously estimated in September, while year-ahead inflation expectations experienced a drop to the lowest level since December 2020, as per preliminary findings from the University of Michigan's Surveys of Consumers. In the precious metals market, gold prices appreciated by 1.2%, settling at $2,612.20 per troy ounce, while silver prices rose by 3.3%, reaching $31.11 per ounce..