Wall Street’s main stock indexes rose on Thursday as recent economic reports suggested a potential easing of monetary policy later this year, with investors eagerly awaiting policymakers’ signals regarding the timing of any rate cuts. Initial data on state unemployment benefits claims indicated a weaker labor market than anticipated, aligning with the Federal Reserve’s projection of three rate cuts in 2019. Federal Reserve Chair Jerome Powell’s statements and data on slowing U.S. services sector activity had led to gains in the previous session, fostering optimism among investors.
While the possibility of rate cuts later in the year has been acknowledged by policymakers, Powell emphasized the need for greater confidence in sustainable inflation before implementing such measures. Market participants welcomed this cautious approach, indicating that as long as a path towards rate cuts exists, the delay in immediate action may not necessarily be negative. Despite previous concerns stemming from strong economic data earlier in the week, current market expectations point towards a likelihood of at least a 25 basis point rate cut in June, as indicated by the CME Group’s FedWatch tool.
Investors will closely watch for comments from key Fed officials, such as Richmond Fed President Thomas Barkin and Cleveland counterpart Loretta Mester, for further insights into monetary policy perspectives before the release of crucial nonfarm payrolls data. Market dynamics have favored advancing issues over decliners, with notable movements in equity sectors and individual stocks such as Meta Platforms, Alphabet, Levi Strauss, and Lamb Weston. The overall market sentiment remains positive, with the S&P index showcasing new highs and lows, reflecting the ongoing volatility in today’s financial landscape.