Wall Street gains as recent data bolsters rate cut hopes

By Shristi Achar A and Shashwat Chauhan

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., April 1, 2024. REUTERS/Brendan McDermid

April 4 (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 claims for state unemployment benefits rose to 221,000 for the week ended March 30 versus an estimate of 214,000 forecast by economists polled by Reuters, indicating a slowing labor market, which supports the Federal Reserve's target of three rate cuts this year.

The S&P 500 (.SPX), opens new tab and Nasdaq (.IXIC), opens new tab closed higher in the last session after data showed the U.S. services industry growth slowed further in March. Statements from Federal Reserve officials, including from Chair Jerome Powell, also supported the sentiment.

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.

"With every new release, investors are hoping that the data will support a slowing economy and resultant Fed rate cuts," said Peter Andersen, founder of Andersen Capital Management.

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.

At 9:35 a.m. ET, the Dow Jones Industrial Average (.DJI), opens new tab was up 278.08 points, or 0.71%, at 39,405.22, the S&P 500 (.SPX), opens new tab was up 42.35 points, or 0.81%, at 5,253.84, and the Nasdaq Composite (.IXIC), opens new tab was up 159.32 points, or 0.98%, at 16,436.78.

Ten of the 11 major S&P 500 sectors were trading higher, with information technology (.SPLRCT), opens new tab leading gains, up 1.2%, while rate-sensitive real estate (.SPLRCR), opens new tab rose around 1%.

Most megacap growth stocks edged up in early trading, with Meta Platforms (META.O), opens new tab, Amazon.com (AMZN.O), opens new tab and Nvidia (NVDA.O), opens new tab up between 1.2% and 3.1%.

The Philadelphia Semiconductor Index (.SOX), opens new tab jumped 1.5%, with Micron Technology (MU.O), opens new tab amongst the top gainers, rising 1.5% to a fresh record high.

Levi Strauss (LEVI.N), opens new tab jumped 16.8% after the apparel maker raised its annual profit forecast, citing savings from its recent cost-cutting measures and fewer discounts. Online furniture retailer Wayfair (W.N), opens new tab advanced 4.4% after Evercore ISI upgraded its rating to "outperform" from "in-line".

Block (SQ.N), opens new tab fell 3.4% after Morgan Stanley downgraded the payments fintech company to "underweight" from "equal-weight".Lamb Weston (LW.N), opens new tab dropped 12.5% after the frozen goods maker trimmed its full-year revenue and adjusted profit guidance.

Advancing issues outnumbered decliners by a 6.00-to-1 ratio on the NYSE by a 3.68-to-1 ratio on the Nasdaq. The S&P index recorded 42 new 52-week highs and 1 new lows, while the Nasdaq recorded 50 new highs and 17 new lows.

Source: Reuters