US: S&P 500, Nasdaq hit intraday record highs as rate-cut hopes trump shutdown jitters

[NEW YORK] The S&P 500 and the Nasdaq hit intraday record highs at market open on Thursday (Oct 2), on the back of renewed expectations for interest rate cuts, while traders brace for a data-light end to the week with few fresh catalysts.

Investors have anchored their expectations to a dovish Federal Reserve, which has allowed them to brush aside uncertainty surrounding the US government shutdown.

At the heart of the Fed’s policy outlook is the labour market, a critical piece of its dual mandate. With the government shutdown creating a data vacuum, investors are relying more heavily on alternative sources.

“I think they will look at the fact that the trend in the jobs market continues to be weak, which is one of their mandates that they’re trying to defend right now,” said Art Hogan, chief market strategist at B Riley Wealth.

At 09:54 am ET, the Dow Jones Industrial Average rose 118.27 points, or 0.25 per cent, to 46,559.37, the S&P 500 gained 8.65 points, or 0.13 per cent, to 6,719.85 and the Nasdaq Composite gained 56.62 points, or 0.25 per cent, to 22,811.78.

Earlier in the session, the S&P and the Nasdaq indexes hit their intraday record highs of 6,731.94 and 22,900.60, respectively.

The tech sector, up 0.3 per cent, was the biggest boost to the S&P 500. Nvidia rose 0.8 per cent, while Broadcom and Advanced Micro Devices were up 1 per cent and 1.7 per cent, respectively.

The stocks catapulted the broader semiconductor index to a record high, and helped boost the Nasdaq.

Advanced Micro Devices rose after a report said Intel was in early talks to add the chipmaker as a foundry customer.

The Industrials sector rose 0.4 per cent on the S&P 500. Caterpillar hit a record high and was last up 2.4 per cent.

Consumer discretionary stocks fell 0.2 per cent. Tesla reversed early gains to fall 0.5 per cent despite reporting third-quarter deliveries above analysts’ estimates.

According to a report from global outplacement firm Challenger, Gray & Christmas, US employers announced fewer layoffs in September but hiring plans so far this year were the lowest since 2009. It came a day after a weaker-than-expected ADP National Employment Report on Wednesday.

These reports are filling the gap left by the weekly jobless claims report, a key gauge of labour market health, which on Thursday became the first data casualty of the government shutdown.

Traders have read the recent data as enough to push the Federal Reserve towards a 25-basis-point rate cut at its upcoming policy meeting.

“The longer the shutdown lasts, the more the Fed will feel inclined to continue to cut rates,” Hogan said.

In stocks, credit bureaus Equifax and TransUnion fell 8.4 per cent and 11.4 per cent, respectively, after FICO launched a programme that could allow mortgage lenders get access to credit scores without relying on the bureaus. FICO surged 30.1 per cent to top the benchmark index.

Occidental Petroleum said it would sell its petrochemical division to Warren Buffett’s Berkshire Hathaway for US$9.7 billion. Shares of the oil and gas producer fell 4.2 per cent.

Advancing issues outnumbered decliners by a 1.3-to-1 ratio on the NYSE and by a 1.31-to-1 ratio on the Nasdaq.

The S&P 500 posted 26 new 52-week highs and seven new lows while the Nasdaq Composite recorded 90 new highs and 38 new lows. REUTERS