Stock Market Today: Stocks rise with jumbo Fed cuts on the table

US stocks gained momentum on Friday afternoon after Wall Street expectations for a jumbo interest rate cut by the Federal Reserve rose overnight, setting the stage for strong weekly gains.

The S&P 500 (^GSPC) rose 0.7% while the tech-heavy Nasdaq Composite (^IXIC) rose 0.8% to point to a fifth day of gains for both gauges amid a rebound for technology stocks. The Dow Jones Industrial Average (^DJI) added 0.9%, or more than 350 points.

Stocks are rising as markets warm again to the prospect of a half-point rate cut by the Fed after virtually shutting down the possibility of a major pivot in light of recent inflation and jobs data. Traders are now pricing in a 49% chance of a 50 basis point move next week, compared with a 15% chance of a one point move on Thursday.

Read more: Fed forecast for 2024: What experts say about rate cut prospects

The possibility of a 0.5% decline rose amid reports in the Financial Times and Wall Street Journal that the size of the Fed's Sept. 18 decision will be a close call. Adding to the debate, influential former New York Fed President Bill Dudley said there was a “strong case” for deeper cuts.

The yield on the benchmark 10-year Treasury (^TNX) fell 2 basis points to about 3.66% on Friday. At the same time, the yield on the 2-year note, which is seen as sensitive to monetary policy, fell to just above 3.58%.

Markets have been whipped up in recent days by shifting speculation about whether the Fed will opt for a quarter-point or half-point cut when it makes its first expected rate cut this cycle. Worries about a sluggish labor market and the risk of a recession have helped feed that volatility — which Wall Street believes could continue if a 0.5% decline comes through.

In individual stocks, Adobe ( ADBE ) shares dipped in afternoon trade after the software maker's outlook failed to show improvement from its AI push. Meanwhile, Oracle ( ORCL ) stock rose again thanks to an optimistic forecast for revenue growth driven by cloud demand over the next five years.

Boeing ( BA ) shares pulled back after factory workers went on strike, halting production across the planemaker's Seattle hub, its largest.

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Fri, Sep 13, 2024 at 12:15 PM PDT

Trump Media stocks rose after Trump said he would not sell shares

At the end of a press conference near Los Angeles on Friday afternoon, Donald Trump was asked about the decline in shares of his social media company and whether he was selling his shares.

No, he quickly promised. He didn't sell, reports Ben Warshkull of Yahoo Finance.

The comment immediately sent shares in Trump Media & Technology Group ( DJT ) up 10% at one point Friday afternoon. DJT is the publicly traded parent company behind Truth Social

“I'm not leaving, I love it,” he told reporters during a reply in which he reiterated that what he said was his plan to both post on his Truth social account and hold onto his shares.

Trump has been subject to a lockup period on his stake in the company but that ends next week, on September 19, when the GOP nominee could potentially begin selling. To shore up his position, Trump will have access to what could be a multi-billion dollar windfall — but one that is nonetheless down more than 70% from its peak at the start of the election season.

“A lot of people think I'm going,” he said at another point, adding that Elon Musk, who has endorsed Trump, would love to see him switch to X entirely but plans to stay where he is.
Fri, Sep 13, 2024 at 12:01 PM PDT

Look ahead to the week ahead

A crucial Fed meeting is just days away, a key policy shift and the formal end to a year-long campaign designed to lower inflation.

What was months in the making is now just a few days away. And while the central bank is widely expected to begin cutting rates at the end of its policy huddle on Wednesday, what is less certain is the size of the cut.

Market bets are now fairly split on whether the Fed will ease rates by a tighter 50 basis points or 25 basis points. More severe cuts will come in an effort to protect a weakened labor market and reduce the risk of a recession, but will spook stock markets and signal a deeper recession.

On the corporate front, only a handful of companies are set to report earnings, including FedEx (FDX), General Mills (GIS), and Darden (DRI).

Brent Sanchez of Yahoo Finance has a graphical breakdown of what to watch next week:
Fri, Sep 13, 2024 at 11:22 am PDT

The case for a big Fed rate cut

“We believe it is clear what the Fed should do next week: reset policy rates 50bp lower to adjust for the changing balance of risks,” JP Morgan analyst Michael Ferroli wrote in a preview note on Friday.

Friday saw a rise in expectations for a jumbo rate cut by central bankers, according to the CME FedWatch tool, following reports from the Financial Times and Wall Street Journal that policymakers were struggling to come to a decision. Investors now place a roughly 49% chance of a 50 basis point cut at the Fed's meeting next week, compared with 15% at one point on Thursday.

Ferroli said the Fed should “front-load” its rate cuts because if central bankers cut rates by 25 basis points each time, it would take about a year to return to sound interest rate policy. Additionally, Ferroli wrote, |In hindsight, it may be appropriate to start the cycle in late July.”

Still, as Yahoo Finance's Josh Shaffer reports, the Fed has reason to pursue a more dovish approach, primarily because of dire signals on Wall Street about a 50 basis point cut.

But Fairley has a response to this line of thinking.

“The committee may be concerned about sending an overly cautious message about the outlook. Powell has proven himself to be a skilled communicator and we believe he can convey that the lower level change in rates is intended to reinforce their forecast for a soft landing.”
Fri, Sep 13, 2024 at 10:49 AM PDT

Stock trending in afternoon trading

Here are some of the top stocks on Yahoo Finance's Trending Tickers page during Friday afternoon trading:

Boeing (B.A) The planemaker's shares rebounded as factory workers went on strike, halting production across the company's Seattle hub, its largest. Credit rating agency Fitch said on Friday that an extended work stoppage could pose the risk of a credit rating downgrade and affect Boeing's operations.

Adobe (ADBE): The software company plunged in afternoon trading after releasing an outlook that failed to show improvement from its AI push. Shares fell nearly 9%.

RH (RH): Shares of the furniture retailer rose more than 20% Friday afternoon, building on momentum from Thursday when the company reported revenue and earnings that topped estimates.

oracle (ORCL): The database software and company rose 1% after raising its fiscal 2026 forecast and announcing it expects sales to top $104 billion in fiscal 2029.
Fri, Sep 13, 2024 at 10:01 AM PDT

Boeing strike may risk credit rating downgrade

With workers at Boeing's West Coast factories set to strike on Friday, Fitch said an extended work stoppage could pose the risk of a credit rating downgrade and affect the planemaker's operations.

Boeing shares fell nearly 4% in afternoon trading Friday as workers at the factory went on strike for the first time in 16 years, following a vote by its largest union to reject a contract offer for workers at the company's Seattle hub.

The labor dispute comes as Boeing is still reeling from heightened regulatory scrutiny following a high-profile January incident in which a door panel on a 737 MAX jet detached mid-flight.

If the strike continues after several weeks, Fitch said Boeing's management would need to find new sources of liquidity to stay within its cash targets and credit rating agency levels before a possible downgrade, Reuters reported.

Conversely, if the parties resolve the strike before two weeks, Fitch said Labor Action would request a rating change.
Fri, Sep 13, 2024 at 9:06 AM PDT

The stock gains momentum in the afternoon session

U.S. stocks gained momentum Friday afternoon as expectations for larger cuts from the Federal Reserve rose to about 43%, according to the CME FedWatch tool.

The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) climbed 0.7% amid a rebound for tech stocks, pointing to a fifth day of gains for both gauges. The Dow Jones Industrial Average (^DJI) also added 1%, or more than 400 points.
Fri, Sep 13, 2024 at 8:10 am PDT

Bets have risen for a big Fed rate cut next week

The mood on Wall Street changed as traders saw a higher likelihood that the Fed would opt for a big, half percentage point rate cut next week, changing expectations that had previously settled around a more modest one-quarter cut.

The possibility of a 0.5% decline rose amid reports in the Financial Times and Wall Street Journal that the size of the Fed's Sept. 18 decision will be a close call. Adding to the debate, influential former New York Fed President Bill Dudley said there was a “strong case” for deeper cuts.

According to the CME FedWatch tool, during Friday morning trading, the probability of a more discrete cut of 50 basis points stood at 43%, while the probability of a more traditional 25 basis point cut registered at 57%. The odds were close to 50-50 before the trading session, but the odds of a major cut were much higher on Friday than a day earlier, which was 28% and 30% forecast a week ago.
Fri, Sep 13, 2024 at 7:27 am PDT

Consumer sentiment rose for the second month in a row

US consumer sentiment improved for the second month in a row, reaching levels last seen in May and up nearly 2% from last month's reading.

The first September report of the University of Michigan Consumer Sentiment Index showed a reading of 69, driven in part by the perception that prices are becoming more favorable to consumers. A commonly followed measure of consumer confidence in the US economy is well above the June 2022 low, which registered about 40% worse.

But Joan Hu, director of consumer surveys, said in a statement Friday, “Consumers will remain cautious as the upcoming election creates considerable uncertainty.”

Inflation expectations for the year ahead also improved, continuing a four-month trend of optimism that price pressures would cool, according to the report. The current reading of 2.7% is the lowest since December 2020, the report said, falling within a range seen in earlier years of the pandemic.

Longer-term expectations, however, were little changed, rising to 3.1% from last month's 3%. They remain “modestly higher” than in pre-pandemic years, suggesting that consumer perceptions are still affected by the global health crisis and the inflation that followed.
Fri, Sep 13, 2024 at 6:33 AM PDT

Stocks moved higher as market bets edged closer to a half-point Fed cut

U.S. stocks rose on Friday after Wall Street expected the Federal Reserve to shoot for more drastic interest rate cuts overnight, setting the stage for strong weekly gains.

The S&P 500 (^GSPC) rose about 0.2% while the tech-heavy Nasdaq Composite (^IXIC) climbed just above the flat line to indicate a fifth day of gains for both gauges amid a rebound for tech-heavy stocks. The Dow Jones Industrial Average (^DJI) added roughly 0.2%.