Stocks started to trim some gains in afternoon action Thursday, but major indexes still felt the euphoria from Wednesday’s Federal Reserve meeting. The ripple effects from the two-day meeting and Fed Chair Jerome Powell’s comments extended to bank stocks, as the likes of Dow Jones component Goldman Sachs (GS) jumped on the stock market today.
decisions on interest rates impact both the economy and the stock market. IBD News Editor Ed Carson shares how reactions by each can differ and what investors need to know.” vid-name=”Fed Interest Rate Decisions: Market Influence And Investor Psychology Impact Of Cuts And Hikes” vid-cat=”Industry Insights” vid-date=”03/20/2024″ vid-date-tmsp=”1710938202″ vid-image=”https://www.investors.com/wp-content/uploads/2024/03/cReAVOpP-640×360.jpg” vid-authors=”MEREDITH HEYMAN”
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The Dow Jones Industrial Average jumped more than 300 points, or 0.8%, while the tech-heavy Nasdaq trimmed gains to 0.3%. Meanwhile, the S&P 500 rose nearly 0.4% and held above the 5,200 level as the small-cap Russell 2000 popped 1.3%.
Volume rose on the New York Stock Exchange and the Nasdaq vs. the same time on Wednesday.
The markets started moving late Wednesday after Fed chief Powell indicated three quarter-point rate cuts in 2024, and that action snowballed into Thursday. Powell didn’t give details on when rate cuts would start, but the odds for a quarter-point cut at the June 12 meeting currently sit at 66.4%, according to the CME FedWatch survey.
With the current federal funds rate at 5.25%-5.5%, three cuts would drop it to a range of 4.5% to 4.75% by the end of 2024. The Fed remains steadfast in getting to the 2% inflation level, but says it will take time.
Bank Stocks Hit Highs
Meanwhile, financial stocks seemed to get a lift from the Fed announcement, rallying on expectations of lower interest rates on the horizon. Goldman Sachs bolted more than 4% after JPMorgan maintained its overweight rating and raised its price target on the stock to 424 from 421.
The stock is extended from a buy zone of a long, undefined base with a 389.58 buy point. Goldman stock is on pace for its highest close since Nov. 3, 2021, when it finished the day at 417.90, according to Dow Jones.
Mirroring Goldman Sachs’ rise, Bank of America (BAC) notched up 1.9% and JPMorgan Chase (JPM) increased more than 1%. All three hit 52-week highs on the stock market today.
The Financial Select SPDR ETF (XLF) gained 0.8%.
Stock Market Today: Indexes Celebrate Anniversary
After the Fed meeting, the Dow, S&P 500 and Nasdaq all closed at record highs Wednesday. Small caps were the clear winner as the Russell 2000 jumped 1.9%.
Major stock indexes have come a long way. This Saturday, March 23, marks the four-year anniversary of the pandemic low for the market, as the Dow has climbed 113% since hitting its low that day. The S&P 500 has surged 134% since then while the Nasdaq has rallied 139% over the same time frame, according to Dow Jones Market Data.
In Thursday’s action, the Invesco QQQ Trust (QQQ) advanced 0.7%, while the Innovator IBD 50 ETF (FFTY) jumped 1.6%. The 10-year Treasury yield inched up to 4.28%. And West Texas intermediate crude oil dipped to near $81 a barrel.
Weekly initial jobless claims came in at 210,000 vs. the 209,000 expected for the week ended March 16, and lower than the revised 212,000 from the prior week.
Magnificent Seven Stock Under Fire; Restaurant Stock Sinks
Dow Jones stock Apple (AAPL) tumbled more than 4% on news the Justice Department and 16 states sued the tech giant on Thursday. The antitrust case says Apple limits competition on phones and other products and blocks software developers from offering consumers other options.
The stock fell further below its 50-day moving average and undercut its 21-day exponential moving average on the stock market today. Its IBD Relative Strength Rating is a low 31. Apple stock was the worst performer in the Dow on Thursday.
Olive Garden parent Darden Restaurants (DRI) sold off more than 6% after the company reported in-line profit for its fiscal third quarter but said sales were lower than estimates. In addition, quarterly same-store sales unexpectedly dropped. Darden also guided lower for its 2024 revenue and same-store-sales growth. The stock fell below its 50-day line.
Bitcoin’s price rose to just above $66,500, leaving bitcoin-related stocks mixed. MicroStrategy (MSTR), which owns a large amount of bitcoin, surged 4% on the stock market today. Coinbase (COIN) added more than 2% while Marathon Digital (MARA) reversed course and sank nearly 4%. Riot Platforms (RIOT) also gave back gains and lost nearly 3%.
Dow Jones component Microsoft (MSFT) climbed around 1% to a record high as its “New Era of Work” event was getting underway Thursday. Officials from…
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