US stock markets hit records: growth drivers and investor optimism
Three key US stock indexes hit new all-time highs on Wednesday. Tech giants showed solid gains thanks to impressive financial results from Salesforce. Investors also got a boost from unexpected statements from Federal Reserve Chairman Jerome Powell.
The Fed's Optimistic View
Powell noted that the U.S. economy looks much better than expected back in September, when the regulator began its cycle of interest rate cuts. According to him, this improvement allows the central bank to act more carefully when making decisions about further rate cuts. This statement was made at a conference organized by the New York Times and became a key signal for the market.
Experts' opinion: the market was spurred by Powell's words
"Optimism in the market increased after Powell's comments and the release of the Fed's report on economic activity," said Peter Cardillo, chief market economist at Spartan Capital Securities.
"Beige Book": economic activity is growing
According to the Federal Reserve's summary report, known as the "Beige Book", since the beginning of October, the U.S. economy has shown moderate growth in most regions of the country. The document is based on survey data and interviews with businesses and shows that, despite global challenges, economic activity remains resilient.
What are investors waiting for?
All eyes are now on the Federal Reserve meeting on December 17-18, where most market participants expect the regulator to cut interest rates for the third time in a row.
This new round of optimism, supported by stable economic data and moderate expectations for the Fed's actions, continues to heat up the stock market, making the end of the year an extremely successful one for investors.
Tech giants lead the way: Salesforce records and the growth of the cloud sector
Salesforce (CRM.N) shares soared by 11%, reaching their all-time high. Such an impressive growth was due to the company beating analysts' estimates for third-quarter revenue. Moreover, Salesforce raised the lower limit of its full-year forecast, which strengthened investor confidence. This success inspired other cloud companies, whose shares also rose.
Gainers: from technology to consumer sector
The S&P 500 Tech Index (.SPLRCT) ended the day at a record high. The Communications Services (.SPLRCL) and Consumer Staples (.SPLRCD) indices also posted impressive results, reflecting broad optimism in the market.
Chips and Innovation: Marvell Technology Star
Semiconductor maker Marvell Technology (MRVL.O) soared 23.2% to a new record after an optimistic fourth-quarter earnings estimate beat analysts' expectations. Following this, the Semiconductor Index (.SOX) rose 1.7%, while Nvidia (NVDA.O) added 3.5%.
Major Index Records
US stock exchanges ended the day with solid gains. The Dow Jones Industrial Average (.DJI) rose 308.91 points (+0.69%) to 45,014.44. The S&P 500 (.SPX) rose 36.59 points, or 0.60%, to close at 6,086.47. The Nasdaq Composite (.IXIC) led the way, adding 254.21 points, or 1.30%, to close at 19,735.12.
Awaiting Fresh Employment Data
Investors are looking ahead with interest to key employment data due out on Friday. Updated jobless claims data will also be released on Thursday, which could provide additional insight into the state of the labor market and economic activity in the United States.
New Day, New Records
Inspired by strong financial results and improved forecasts, investors continue to ramp up activity, allowing stock markets to remain optimistic. The end of the year promises to be not only successful, but also record-breaking for many sectors of the economy.
Economic data confirms investor sentiment as market continues to rally
Private sector employment in the United States increased in November, although the pace of growth remained modest, data released Wednesday showed. The figures confirm a stable labor market but do not show the sharp jumps some analysts had expected.
Services Sector Slows
In parallel, a survey by the Institute for Supply Management (ISM) recorded a slowdown in activity in the US services sector in November. After months of dynamic growth, the ISM index declined, which was partly reflected in the S&P Services Index, which was revised to 56.1.
The Fed is ready to cut rates
Economic indicators confirm the likelihood that the Federal Reserve will decide to cut interest rates in December. Sam Stovall, chief investment strategist at CFRA Research, noted that Friday's employment report will be the key event of the week: "This is the main indicator that everyone will be looking at."
Advancing Stocks Are Overweight
On the New York Stock Exchange (NYSE), advancing stocks outnumbered declining ones by a ratio of 1.2 to 1. There were 367 new highs and only 79 new lows. The Nasdaq saw a similar pattern, with 2,372 shares rising and 1,930 falling, for a 1.23-to-1 ratio.
Volumes: Below Average, but Solid
Despite the frenetic market activity, total trading volume on U.S. exchanges was 13.06 billion shares, slightly below the 20-session average of 14.89 billion.
Tech and Rates Drive Global Markets
The rally in U.S. tech stocks continues to set the tone for global stock markets. Expectations of further interest rate cuts are boosting risk appetite among investors. Meanwhile, currency markets remain stable, with the euro and dollar showing little change even amid political developments in South Korea and France.
Markets Look to the Future with Optimism
The combination of moderate economic growth, solid stock market performance, and expected Fed action is bolstering investor confidence. If current trends continue, the market could end the year on a high despite the challenges of recent months.
UnitedHealth Shares Rise Amid Tragedy
To the surprise of many, UnitedHealth (UNH.N) shares rose by almost 1% despite the tragic events: the head of the company's insurance division, Brian Thompson, was fatally shot in New York on Wednesday morning. The incident did not shake investor confidence, which underscores the asset's resilience in the eyes of the market.
MSCI World Index Continues to Rise
The MSCI index, which tracks the state of stock markets around the world, rose by 0.47%. This demonstrates the continued optimism in global markets despite regional crises and political upheaval.
Fed signals dovish approach
Federal Reserve Chairman Jerome Powell's speech was another boost for investors, stressing that improving economic data allows the Fed to be more cautious in setting a neutral interest rate policy. That signal helped push down U.S. Treasury yields, which in turn fueled risk appetite.
South Korea: A Day of Political Turmoil
The market was weighed down early in the day by negative news from South Korea, where lawmakers called on President Yoon Seok-yeol to resign or face impeachment. That came as martial law was lifted earlier, raising uncertainty.
South Korea's KOSPI (.KS11) fell 1.4%, extending its losses for the year. It is now down more than 7% for 2023, making it Asia's worst-performing major stock market this year.
Market Breaks Barriers
Despite global turmoil and tragic events, U.S. markets are showing incredible resilience. Tech giants are setting the tone, and the Fed's dovish approach is keeping the mood positive. As the world grapples with political challenges, U.S. indices remain a model of stability and growth.
Asian markets are mixed: South Korea under pressure, Europe awaits change
The MSCI index covering shares of the Asia-Pacific region outside Japan (.MIAPJ0000PUS) showed a decline of 0.15%. The main contributor to the decline was Samsung Electronics (005930.KS), but most markets in the region, with the exception of South Korea, ended in positive territory.
Meanwhile, the South Korean won has steadied on the expectation of central bank intervention, but remains close to a two-year low against the dollar, which was hit earlier this week.
Support for South Korean financial markets
Amid instability, South Korea's finance ministry said it would provide unlimited liquidity to stabilize financial markets. The country's financial regulator also said it would place 10 trillion won ($7.1 billion) in a stock market stabilization fund to support investors and minimize economic risks.
Europe: Gains amid political instability
European stocks (.STOXX) ended the day up about 0.4% despite ongoing tensions. The euro remained weak, hovering near a two-year low, amid uncertainty over a no-confidence vote in France.
Political crisis in France
Later in the day, the French parliament voted to oust Prime Minister Michel Barnier's coalition government. The move was historic: the first time in more than 60 years that a French government has been forced to resign due to a no-confidence vote. The crisis has been driven by a growing budget deficit that the country is struggling to manage.
Euro under pressure, tariff war expectations intensify
On currency markets, the euro ended the day at $1.0511, almost unchanged. However, the single currency has fallen 5% in the past three months, reflecting investor concerns about the eurozone's domestic problems and uncertainty over future US economic policy.
Investors await cues from Washington
As US President-elect Donald Trump's inauguration approaches, global markets are bracing for the possibility of new tariffs that could impact global trade. This factor remains in focus, adding to tensions in both Europe and Asia.
Markets at a crossroads
Asian and European markets face a host of challenges, from political instability to currency volatility. Despite local difficulties, investors remain cautiously optimistic, awaiting key decisions from both national governments and global regulators.
October: Job openings jump, layoffs fall
The U.S. labor market posted a notable increase in job openings in October, with the largest decline in layoffs in a year and a half, according to data released Tuesday. However, despite the positive dynamics, a separate survey showed that employers are cautious about hiring, preferring to hold off.
Rate cuts in question
The St. Louis Fed president noted that the prospects for further rate cuts are becoming less clear. This statement reflects the regulator's cautious approach to further monetary easing, especially amid ongoing uncertainty in global markets.
BlackRock: New Challenges for Inflation and Debt Markets
BlackRock Investment Institute (BII) experts have warned that the United States may face persistent inflationary pressure. Key factors include growing geopolitical instability, significant investments in artificial intelligence (AI) development, and the transition to a low-carbon economy.
In debt markets, BII revised its position on short-term US Treasuries from "underweight" to "neutral". Analysts believe that the current market price is already in line with their expectations for the Fed to cut interest rates in 2024.
Economic Stability in the Face of Uncertainty
The combination of moderate economic growth, subdued inflation growth, and a cautious approach from regulators creates a balanced picture of the current situation in the United States. While the outlook for rate cuts remains murky, business optimism and a strong labor market indicate the economy is poised to handle future challenges.
Cloud Gainers
US cloud technology continues to delight investors. Oracle (ORCL.N) rose 3.2%, ServiceNow (NOW.N) added 3.5%, and Datadog (DDOG.O) and Snowflake (SNOW.N) jumped 4%. These results confirm the sector's strong growth amid positive expectations.
In addition, Salesforce updated its fiscal 2025 revenue guidance to between $37.8 billion and $38 billion. The company's previous guidance was in the range of $37.7 billion and $38 billion, demonstrating management's optimism about the business's prospects.
Oil: OPEC+ Expectations and Pressure on Prices
The oil market remains in the focus of traders who are awaiting important decisions from OPEC+ on supply volumes. Meanwhile, a larger-than-expected reduction in US crude inventories last week provided some support to the market, although the overall trend remains negative.
US WTI crude oil fell by 1.62%, stopping at $68.81 per barrel, while Brent oil fell by 1.48%, to $72.53 per barrel. Investors continue to assess the balance between supply and demand, taking into account geopolitical factors and seasonal fluctuations.
Cryptocurrencies: Positive Signals for the Industry
Cryptocurrency markets are seeing steady growth. Bitcoin rose 3% to $98,892, while Ethereum soared 7.4% to $3,881.
The rise in crypto assets is due to Donald Trump's announcement of the appointment of Paul Atkins as the head of the US Securities and Exchange Commission (SEC). Atkins is known for his loyal views on the crypto industry, which has caused a positive reaction from market participants.
Bottom line: Optimism amid expectations
The growth of cloud companies, the stable prospects of Salesforce, expectations of OPEC+ decisions, and positive signals in the cryptocurrency sphere form a rich picture of global financial markets. Despite local fluctuations, positive investor sentiment remains, opening up opportunities for further growth in key sectors.
