A separate report, meanwhile, said fewer US workers applied for unemployment benefits last week, a signal that layoffs nationwide are relatively low and aren’t damaging the job market.
Such data bolster the hope that has sent US stocks to records: The economy could make a perfect escape from the worst inflation in generations, one that ends without a recession that many investors had seen as nearly inevitable. And with the Federal Reserve now cutting interest rates to keep the economy humming, the expectation among optimists is that stocks can rise even further.
Critics, meanwhile, warn stock prices look too expensive given how much faster they’ve climbed than profits for companies.
Lower interest rates can ease the brakes off the economy, boost prices for investments and make borrowing bills less costly for households and businesses. And rates are heading lower around the world, with only a couple exceptions.
The European Central Bank on Thursday cut its main interest rate by a quarter of a percentage point. That helped send stock indexes higher by 1.2 per cent in France and 0.8 per cent in Germany. They halted a run of losses that started the day in Asian stock markets, where Japan’s Nikkei 225 fell 0.7 per cent and Hong Kong’s Hang Seng dropped 1 per cent.
On Wall Street, insurer Travelers was the biggest reason for the Dow’s setting another record. It jumped 9 per cent after reporting stronger profit and revenue for the latest quarter than analysts expected. Higher income made from its investments and elsewhere helped cover greater losses due to Hurricane Helene and severe wind and hail storms in multiple states.
Blackstone also pushed upward on indexes after the investor in real estate, hedge funds and other alternative investments reported stronger profit than expected. It climbed 6.3 per cent after CEO Stephen Schwarzman said it’s seeing broad-based acceleration across its businesses.
They helped offset Elevance Health’s tumble after it reported weaker profit for the latest quarter than expected. The insurer also cut its forecast for profit for the full year, saying it was dealing with a “timing mismatch” between Medicaid rates and higher claims from customers.
CSX fell 6.7 per cent after falling short of analysts’ profit expectations for the latest quarter. The railroad also expects only modest volume growth the rest of the year as the Southeast rebuilds after two major hurricanes.
All told, the S&P 500 slipped 1.00, or less than 0.1 per cent, to 5,841.47. The Dow gained 161.35 points, or 0.4 per cent, to 43,239.05, and the Nasdaq composite added 6.53, or less than 0.1 per cent, to 18,373.61.
In the bond market, the yield on the 10-year Treasury rose to 4.09 per cent from 4.02 per cent late Wednesday. The two-year Treasury yield, which moves more closely with expectations for action by the Fed, rose to 3.98 per cent from 3.94 per cent.
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All the strong recent reports on the US economy have forced traders to abandon bets that the Fed could cut its main interest rate by another half a percentage point in November. Instead, they’re largely betting the Fed will move forward with a traditional-sized cut of a quarter of a percentage point, according to data from CME Group.
That shift in expectations has helped push Treasury yields higher.
AP
