The Nasdaq Composite and the S&P 500 extended their rallies, achieving record closing highs on Thursday in response to a 25 basis point reduction in interest rates by the Federal Reserve. The technology-heavy Nasdaq surged 1.5% to 19,269.5, while the S&P 500 climbed 0.7% to 5,973.1. Although the Dow Jones Industrial Average dipped slightly to 43,729.3 following a recent record close, the positive momentum in the markets was notable.
This surge came after former President Donald Trump’s victory in the US presidential election, which contributed to investor optimism. Among various sectors, communication services and technology stocks led the market gains, while financial stocks experienced the most significant decline. The Federal Open Market Committee of the central bank lowered its benchmark lending rate to a range of 4.5% to 4.75%, reflecting a Bloomberg-compiled consensus. Fed Chair Jerome Powell commented on the potential for gradual adjustments, stating, "If the economy remains strong and inflation is not sustainably moving toward 2%, we can dial back policy restraint more slowly.
However, should the labor market weaken unexpectedly or inflation decline faster than expected, we can act more quickly." In terms of bond yields, the US 10-year yield decreased by 9.4 basis points to 4.33%, while the two-year yield saw a drop of 6.9 basis points to 4.2%. In corporate news, Warner Bros.
Discovery ($WBD) reported the strongest growth in subscribers for its Max streaming platform during the September quarter. Despite a decline in revenue compared to the previous year due to a weaker box office performance, the media and entertainment giant's shares surged 12%, making it one of the top performers on both the S&P 500 and the Nasdaq. Viatris ($VTRS) also performed well, with its shares jumping 14%, marking the second-largest gain on the S&P after exceeding analysts’ expectations with their third-quarter adjusted earnings and revenue.
Conversely, MercadoLibre ($MELI) saw its shares plummet by 16%, the most significant drop on the Nasdaq, after reporting third-quarter earnings that fell short of Wall Street estimates. Match Group ($MTCH) shares dropped 18%, reflecting a disappointing revenue outlook for the fourth quarter following an underwhelming third-quarter report. In commodities, West Texas Intermediate crude prices rose by 0.4%, reaching $72 a barrel.
Economic data revealed that weekly applications for unemployment insurance in the US increased for the first time in four weeks, with continuing claims hitting their highest levels since November 2021. Despite rising mortgage rates, pending home sales in the US remained stable ahead of the presidential election, with Redfin ($RDFN) indicating rates could escalate even further in the near future. Gold prices increased by 1.3% to $2,712.40 per troy ounce, while silver appreciated by 2.4% to $32.08 per ounce..