Overview
On Thursday, U.S. stocks continued their rally after the Federal Reserve announced a 25-basis point rate cut, sparking optimism amid economic growth expectations under President Donald Trump’s administration. The Fed’s decision was largely anticipated by the market, as it responded to signs of easing in the labor market and an inflation rate nearing the central bank’s 2% target. With the Fed maintaining a moderately restrictive stance, investors saw this move as a supportive measure rather than a dramatic shift, focusing instead on potential fiscal policies under the new administration.
The Dow Jones Industrial Average remained nearly flat, while the S&P 500 gained 0.74% and the Nasdaq Composite surged 1.51%, with growth stocks benefiting from the reduced rate. The communication services sector led gains, buoyed by an 11.81% spike in Warner Bros Discovery following an unexpected third-quarter profit. However, financials lagged, giving back some of the gains from the previous session, with banks like JPMorgan and Goldman Sachs seeing declines as Treasury yields pulled back from recent highs.
- Dow Jones Industrial Average: Flat at 43,729.34
- S&P 500: Gained 0.74% to 5,973.10
- Nasdaq Composite: Increased 1.51% to 19,269.46
Fear & Greed Index
Greed – Investor sentiment remained upbeat as the rate cut aligned with expectations, keeping the market focused on growth potential under the new administration.
Sector Performance
- Winners:
- Communication Services: Led by Warner Bros Discovery, up 11.81%, the sector benefited from surprise profits and investor enthusiasm for growth.
- Technology: Gains were broad, as the sector capitalized on the rate cut and expectations for favorable regulatory policies under Trump’s administration.
- Losers:
- Financials: Fell 1.62% as banks pulled back from Wednesday’s surge, with JP Morgan and Goldman Sachs facing declines due to lower yields.
- Utilities: Experienced slight declines, as investor focus shifted to growth and cyclical sectors expected to benefit from anticipated fiscal policies.
Key Movers
- Warner Bros Discovery (WBD): Surged 11.81% following a surprising third-quarter profit, boosting the communication services sector.
- JP Morgan (JPM): Declined 4.32% after a strong previous session, as bank stocks gave back some of their gains.
- Coinbase (COIN): Continued its upward trend as cryptocurrency stocks remained strong under Trump’s favorable stance toward the sector.
Economic Data
- Weekly Jobless Claims: Rose slightly to 221,000 last week, indicating a steady labor market but without major shifts.
- Treasury Yields: The 10-year yield eased to 4.332% after a sharp rise on Wednesday, reflecting investor adjustments to the Fed’s moderate rate cut.
Outlook
With the Federal Reserve’s rate cut aligning with market expectations, investors are looking ahead to December, where further adjustments could be contingent on inflation trends and fiscal measures. Fed Chair Jerome Powell emphasized that future policy actions remain data-dependent, with the Fed prepared to adjust the pace of rate changes if inflation accelerates due to expected tariffs and increased spending.
As Republicans aim to secure both chambers of Congress, enabling smoother implementation of Trump’s agenda, market sentiment favors growth-oriented sectors such as technology and communication services. Financials, meanwhile, may experience volatility as bond yields adjust to inflationary pressures. Investors will closely watch upcoming economic data to gauge the Fed’s policy direction and potential fiscal stimulus impact on growth and inflation in 2025.