The S&P 500 and Nasdaq rose in volatile trading on Thursday as investors grew more hopeful that the Federal Reserve will begin its interest rate cutting cycle next month while awaiting comments from policymakers at Jackson Hole this week.
Expectations of a rate cut received a boost after minutes from the U.S. central bank’s latest meeting on Wednesday showed a “large majority” of officials said such action was likely.
Dovish comments from policymakers including Kansas City Fed President Jeff Schmid, Boston Fed President Susan Collins and Philadelphia Federal Reserve Bank President Patrick Harker also supported the upbeat sentiment.
Money markets currently see a nearly 74 percent chance of a cut of at least 25 basis points (bps) in September, according to the CME FedWatch tool, and around 100 bps of easing by December, according to LSEG data.
Market participants are now focused on the Jackson Hole Economic Symposium that kicks off on Thursday, with Fed Chair Jerome Powell scheduled to deliver remarks on the second day of the event.
Wall Street’s major indexes closed higher in the previous session, with the S&P 500 (.SPX) posting its ninth session of gains in 10, after data showed U.S. employers added far fewer jobs for the year ending March 2024 than originally estimated.
The labor market came under increased scrutiny following an unexpected rise in unemployment in July that sparked a selloff earlier this month. Risk sentiment has since improved following other reports suggesting the economy remains resilient.
“The labor market is cooling, but the real question is to what extent. We should wait for the August unemployment numbers and then see if the Fed is going to respond in a more aggressive manner,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
The latest data showed the number of Americans filing new claims for unemployment benefits rose in the past week, but the level still suggests an improvement in labor market conditions.
Another survey showed business activity fell to a four-month low in August and companies continued to struggle to pass on higher prices to consumers.
At 9:50 a.m., the Dow Jones Industrial Average (.DJI) was down 19.42 points, or 0.05 percent, at 40,870.11, the S&P 500 (.SPX) was up 8.91 points, or 0.16 percent, at 5,629.60 and the Nasdaq Composite (.IXIC) was up 41.94 points, or 0.23 percent, at 17,961.09.
Most of the S&P 500’s 11 sectors rose, led by a 0.5 percent gain in rate-sensitive technology stocks (.SPLRCT).
Among individual stocks, cloud data analytics firm Snowflake (SNOW.N) raised its full-year product revenue forecast. Still, Snowflake shares fell 11 percent, with analysts attributing the drop to the company’s failure to match the increase in revenue projections with an increase in margin forecast.
Zoom Video Communications (ZM.O) added 8.3 percent after raising its annual revenue forecast, while Advanced Auto Parts (AAP.N) fell 18 percent after cutting its annual profit forecast.
Declining stocks outnumbered advancing stocks by a ratio of 1.16 to 1 on the New York Stock Exchange and 1.21 to 1 on the Nasdaq.
The S&P 500 posted 35 new 52-week highs and no new lows, while the Nasdaq Composite posted 45 new highs and 21 new lows.
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