Wall Street gains as recent data bolsters rate cut hopes

By Shristi Achar A and Shashwat Chauhan

(Reuters) – Wall Street’s main stock indexes advanced on Thursday as recent economic reports boosted the prospect of monetary policy easing later this year, while investors awaited policymakers to offer clues on the timing of the cuts.

Initial data on state unemployment benefits claims on Thursday rose to 221,000 for the week ended March 30 compared with an estimate of 214,000 from economists polled by Reuters, which indicates a slowing labor market and supports the Federal Reserve’s target of three rate cuts this year.

In the previous session, data on slowing U.S. services sector activity and statements from Federal Reserve officials, including from Chair Jerome Powell, had led the S&P 500 and the Nasdaq to close higher.

While policymakers generally agreed that rates could fall later this year, Powell said this would happen only when they “have greater confidence that inflation is moving sustainably down” to the Fed’s 2% target.

“People were getting a little bit nervous about rate cuts not happening, but (Powell’s) comments yesterday kind of said let’s not worry too much about that,” said Joe Saluzzi, partner, co-founder and co-head of equity trading at Themis Trading.

“As long as there is a path to rate cuts, it’s actually not a bad thing they’re not cutting rates right now.”

Equities fell earlier this week following some strong economic reports, including manufacturing activity and job openings data that raised doubts about the three rate cuts widely priced in for the year.

Money markets are currently seeing a near 60% chance of at least a 25 basis point rate cut in June, according to the CME Group’s FedWatch tool.

Investors will be closely monitoring comments from Fed policymakers, including Richmond Fed President Thomas Barkin, a voting member, and his Cleveland counterpart Loretta Mester, for further clues on the monetary policy, before the key nonfarm payrolls data on Friday.

Economists polled by Reuters expect the nonfarm payrolls for March to fall to 200,000 from 275,000 in February, while anticipating unemployment rate to remain steady at 3.9%.

At 11:27 a.m. ET, the Dow Jones Industrial Average was up 144.79 points, or 0.37%, at 39,271.93, the S&P 500 was up 32.63 points, or 0.63%, at 5,244.12, and the Nasdaq Composite was up 128.80 points, or 0.79%, at 16,406.26.

Ten of the 11 major S&P 500 sectors were trading higher, with the rate-sensitive real estate leading advances, up around 1.0%.

Meta Platforms rose highest among megacap stocks, up 2.9% after Jefferies raised its price target on the social media giant.

Alphabet, however, slipped 0.8% after a Reuters report that the Google-parent has been talking to its advisers about the possibility of making an offer for HubSpot. Shares of the cloud-based CRM platform were up over 9%.

Levi Strauss jumped 15.7% after the apparel maker raised its annual profit forecast, citing savings from its recent cost-cutting measures and fewer discounts.

Lamb Weston dropped 20.3% after the frozen goods maker trimmed its full-year revenue and adjusted profit guidance.

Advancing issues outnumbered decliners by a 3.98-to-1 ratio on the NYSE by a 2.35-to-1 ratio on the Nasdaq.

The S&P index recorded 49 new 52-week highs and 3 new lows, while the Nasdaq recorded 83 new highs and 46 new lows.

(Reporting by Shristi Achar A and Shashwat Chauhan in Bengaluru; Editing by Anil D’Silva and Shinjini Ganguli)

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