Stock market today: S&P 500, Nasdaq gain as US GDP data, chip stocks lift mood
09/27/2024 01:25
A double dose of optimism for the AI trade and for China's stimulus push is buoying the market ahead of Jerome Powell's comments.
US stocks jumped on Thursday afternoon, setting the stage for fresh record highs. Investors welcomed a slew of updates, including solid US economic data, Micron's (MU) upbeat earnings, and China's pledges of more stimulus.
The Dow Jones Industrial Average (^DJI) rose 0.7%, while the S&P 500 (^GSPC) added more than 0.4% after both gauges slipped back from all-time highs in the prior session. The tech-heavy Nasdaq Composite (^IXIC) gained roughly 0.5% amid a sharp spike in Micron's shares.
Stocks were looking positive again thanks to a triple-dose of optimism for the AI trade, the health of the US economy, and China's stimulus push, which could reverberate through US markets.
During Thursday's session, Super Micro Computer (SMCI) stock tanked 14% after the Wall Street Journal reported the Department of Justice is probing the server maker following a short seller report from Hindenburg Research published last month.
A final update from the US government on second quarter GDP growth beat Wall Street expectations, while weekly jobless claims unexpectedly fell to the lowest levels in four months.
Meanwhile, China's top leaders signaled they are pulling out the stops to revive its moribund economy with new pledges to lift fiscal spending, halt the property crisis, and support the stock market. A big jump in mainland stocks set the CSI 300 (000300.SS) on track for its best week in a decade.
Helping the upbeat mood were growing expectations for another jumbo interest rate cut from the Federal Reserve. Traders are pricing in roughly 50% odds of a 0.5% move at its November meeting, versus 40% a week ago.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Friday's will bring a highly anticipated reading on the PCE index, the inflation metric preferred by the Fed.
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30-year mortgage rate hits 2-year low
The average rate on a 30-year fixed-rate mortgage nudged down slightly this week to hit its lowest level in two years.
Yahoo Finance's Claire Boston reports:
Thirty-year mortgage rates averaged 6.08% as of Thursday, down from 6.09% a week earlier, according to Freddie Mac data.
Average 15-year mortgage rates rose one basis point to 5.16%.
The US economy didn't really have two negative quarters of GDP in 2022
A slew of revisions to Gross Domestic Product (GDP) came out on Thursday. Within them, were revisions to the past several years.
One in particular caught our eye. Initially, the Bureau of Economic analysis had reported that growth in the US economy declined at a 0.6% annualized rate in the second quarter of 2022. This followed a negative print in the first quarter and, at the time, stirred recession discussion as two negative quarters of GDP is an often referenced indicator of recession.
Well after some revisions revealed on Thursday, it turns out the US never actually had two negative quarters of GDP. Revisions to GDP data now show the US economy grew by annualized rate of 0.6% in the second quarter of 2022.
This leaves us with some clarity on why one the most widely anticipated recessions in history was never officially called by the National Bureau of Economic Research. It also serves as a reminder about why predicting recessions is so hard, and even some of the most prominent recession indicator creators have told Yahoo Finance they'll like never be a perfect tool for such a practice.
S&P 500 poised for record close
The benchmark index is on track to close at a new, all-time-high Thursday, as investors cheered on a batch of encouraging updates, including solid US economic data, Micron's (MU) upbeat earnings, and China's pledges of more stimulus. Fed Chair Jerome Powell is also expected to deliver a statement Thursday along with other Fed speakers.
The Dow Jones Industrial Average (^DJI) rose 0.6%, while the S&P 500 (^GSPC) added about 0.3% after both gauges slipped back from all-time highs in the prior session. The tech-heavy Nasdaq Composite (^IXIC) gained close to 0.3% amid a sharp spike in Micron's shares.
Super Micro stock tanks 13% on report of Justice Department probe
Super Micro Computer stock tanked more than 13% and shares were temporarily halted for volatility after the Wall Street journal reported the Justice Department is investigating the maker of data center servers.
The probe comes after short seller Hindenburg Research in August released a report claiming, among other things, "accounting manipulation" at the artificial intelligence high flyer.
Shares dropped as much as 17% immediately following the report and were temporarily halted for volatility.
Meta stock briefly hits all-time high as Wall Street bets on AI vision
Yahoo Finance's Laura Bratton reports:
Meta stock (META) briefly traded at a new all-time intraday high Thursday, following a developer event that put its artificial intelligence ambitions on display.
Shares rose as high as $577 after market open before edging down 0.7%, or around $564, mid-morning.
At Meta Connect 2024 on Wednesday, CEO Mark Zuckerberg unveiled Meta’s newest AI model, Llama 3.2.
Read more here.
Target CEO hopes the company will eventually remove locked cases as it combats retail theft
Yahoo Finance's Brooke DiPalma reports:
Target (TGT) is trying to thread the needle as it combats retail's long-running problem: store theft.
"I feel so much better today than I did a year ago," Target CEO Brian Cornell said in an interview with Yahoo Finance for its Lead This Way series. "It comes back to support at the federal level, at the state level, and at the local level."
Cornell commented on recent legislation, including state initiatives in California which are "starting to crack down" on marketplace abuses.
Read more here.
A government shutdown is averted for now — but two new spending fights loom
Yahoo Finance's Ben Werschkul reports:
One last bit of pre-election lawmaking is now complete after Congress staved off a shutdown and funded the government for three months.
"I want to thank both houses of Congress," President Joe Biden said in a statement "for this bipartisan agreement and for avoiding a costly government shutdown."
But the reprieve will be short-lived, with the plan now setting up lawmakers to be right back in the middle of multiple spending fights when they return to Washington after voters have their say in November.
Read more here.
Oil tanks 3% on report Saudi Arabia vows more supply in December
Oil tanked more than 3% on Thursday after the Financial Times reported Saudi Arabia is determined to start unwinding voluntary production cuts starting Dec. 1, even if it means lower crude prices.
On Thursday West Texas Intermediate (CL=F) fell to trade below $68 per barrel. Brent (BZ=F), the international benchmark price, also dropped below $71 per barrel.
OPEC+ has delayed bringing more barrels onto the market in an effort to support higher prices. The oil alliance led by Saudi Arabia has been losing market share to the US and other crude-producing nations.
Last year the US produced record amounts of oil and natural gas.
Stocks rise on strong economic growth data, chip stocks gain
US stocks rose on Thursday, with the S&P 500 (^GSPC) hitting an intraday record high following the release of a stronger-than-expected GDP print and upbeat earnings from Micron (MU) sending the chip sector higher.
The Dow Jones Industrial Average (^DJI) rose 0.5%, while the S&P 500 added 0.7%. The tech-heavy Nasdaq Composite (^IXIC) led the markets higher, surging 1.2% as Micron shares rose.
Micron's results helped lift the chip sector, including AI heavyweight Nvidia (NVDA), which rose more than 2% in early trading.
The latest economic data shows second quarter US gross domestic product (GDP) rose 3% year over year, a faster pace than Wall Street had expected.
Fresh economic data comes in better than expected
The US economy grew at a 3% annualized pace in the second quarter, a faster pace than Wall Street had expected.
The Bureau of Economic Analysis's third estimate of second quarter US gross domestic product (GDP) was unchanged from the second estimate, which showed 3% annualized growth. Economists had estimated the reading to show annualized growth of 2.9%. The third estimate for second quarter GDP confirms that economic growth was higher than the 1.4% annualized growth seen in the first quarter.
Separately, data from the US Labor Department released Thursday showed 218,000 unemployment claims were filed in the week ending Sept. 21, below Wall Street's expectations for 223,000. This marked the lowest level of weekly claims since the middle of May.
Also out Thursday, durable goods orders for August were flat, better than the 2.6% decline Wall Street had expected.
