NEW YORK (AP) — Wall Street is rising Thursday after its first three-day losing streak since Halloween.
The S&P 500 rose 0.7% in late trading and remained near its highest level since March 2022. The Dow Jones Industrial Average was up 62 points, or 0.2%, and the Nasdaq Composite was up as of 3 p.m. Eastern time at 1.2%. higher.
Big Tech stocks helped push the market higher, led by a 5.5% rise for Google parent Alphabet. They are Wall Street’s most influential stocks due to their massive size and have posted big losses so far this year.
Cerevel Therapeutics also rose 10.8% after AbbVie announced an $8.7 billion deal to buy the company and its pipeline of candidates for schizophrenia, Parkinson’s and other diseases. AbbVie rose 0.9%.
Much of Wall Street’s recent rally has been driven by growing hopes that the Federal Reserve is finally finished with its flurry of interest rate hikes designed to control high inflation. Anticipation is high for a report on Friday, the U.S. government’s latest monthly update on the labor market.
The Federal Reserve wants the job market to slow at just the right amount. Too much weakness would mean putting people out of work and a possible recession, but too much strength could lead to upward pressure on inflation.
So far, expectations are increasing that the Federal Reserve can create a perfect landing for the labor market and the overall economy. Inflation has slowed since its peak two summers ago, and expectations are growing that the Fed’s next move next year will be a rate cut.
A report Thursday said slightly more U.S. workers filed for unemployment benefits last week, although the number was not worryingly high and was exactly in line with economists’ expectations. That left both stock and bond markets relatively quiet, awaiting Friday’s report, which could have a bigger impact.
The yield on the 10-year Treasury note rose to 4.13% from 4.12% late Wednesday. It has generally weakened since crossing the 5 percent mark in October, reaching its highest level since 2007.
The decline in the 10-year yield last month, even after accounting for inflation, is one reason why strategists at Goldman Sachs say the S&P 500 looks like it’s trading “roughly in line with fair value.” , even after almost reaching 9% by November. Expectations of a healthy economy have also helped boost stock prices.
But the path forward could go in one of several directions, depending in part on how quickly inflation continues to cool and whether the Fed actually cuts rates as much as traders expect. According to Goldman Sachs, traders are “approaching the limits of what could reasonably be expected” when it comes to rate cuts without a near-term recession.
“We believe that much of the optimistic scenario is already reflected in US stock prices today,” Ryan Hammond’s strategists wrote in a report.
Since the Federal Reserve began its campaign to sharply raise interest rates early last year, traders have built up bets on an impending halt in rate hikes and possible rate cuts several times, but have been disappointed each time. While Federal Reserve officials have recently suggested that their key interest rate may actually have peaked, some said it is still too early to think about when rate cuts might come.
Hopes for cheaper interest rates benefit all types of investments, especially those that are considered the most expensive or have the promise of major growth furthest into the future. That’s helped Big Tech stocks post huge gains this year.
Alphabet’s jump on Thursday brought its year-to-date gain to just over 55%. A day earlier, the company announced the launch of its artificial intelligence model Gemini. The announcement initially caused little stir on Wall Street, with Alphabet shares falling on Wednesday, but analysts at JPMorgan said in a report that they are “encouraged to see Google’s progress on this major technology shift.”
Alphabet was the single biggest force pushing the S&P 500 higher, but Apple, Amazon and Nvidia all rose at least 1%.
Another winner was JetBlue Airways, which rose 13.6% after it said it may report better-than-expected results for the final three months of the year. The company also slightly lowered the high end of its forecast for fuel costs through the end of 2023.
Crude oil prices have fallen recently amid fears that demand from the global economy may fall short of available supplies. A barrel of benchmark U.S. crude lost another 4 cents to close at $69.34. The price has fallen from $93 at the end of September.
Brent crude, the international standard, fell 25 cents to $74.05 a barrel.
On Wall Street’s losing side, C3.ai slumped 11.4% after reporting weaker sales than analysts expected for the latest quarter.
In overseas stock markets, the Nikkei 225 in Tokyo fell 1.8% on speculation about whether the Bank of Japan will ease its ultra-loose interest rate policy.
Losses were smaller elsewhere in Asia and Europe.
AP business reporters Matt Ott and Elaine Kurtenbach contributed.
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