Topline
The three major market indexes surged Friday afternoon after New York Federal Reserve President John Williams said he sees room for interest rate cuts in the “near term,” raising prospects among investors as waning hopes have pulled down stocks in recent days.
Other Federal Reserve officials have supported maintaining the current rates.
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The Dow Jones Industrial Average rose by more than 600 points (1.4%), while the S&P 500 jumped 1.1% and the tech-heavy Nasdaq rallied more than 1% as of 1 p.m. EST on Friday.
Gains were recorded across the Nasdaq, with increases for Intel (1.5%), Adobe (3.5%), Intuit (6%), Qualcomm (2%), Apple (1.8%), despite losses for Palantir (0.5%), Microsoft (0.9%) and Broadcom (1.3%), while Nvidia’s stock was largely unchanged
The Dow was boosted by increases for Merck & Co (4.7%), Home Depot (3.9%), American Express (2.9%) and Amazon (1%).
Why Are Stocks Rallying Today?
“I still see room for a further adjustment [to interest rates] in the near term” to adjust U.S. monetary policy to “the range of neutral,” said Williams in prepared remarks Friday at a conference hosted by the Central Bank of Chile. Since Williams’ speech, markets have priced in odds of 75.1% for a 25-basis-point cut to interest rates to a range of 3.5% to 3.75%, according to CME’s FedWatch tool. Williams said he believed the risks of a cooling labor market had increased, while the risks of inflation had “lessened somewhat,” adding it was still “imperative” to lower inflation to the Fed’s 2% target. The Dow erased a 700-point gain on Thursday, as odds for an interest rate reduction fell well below 40%. Those reduced odds followed the Bureau of Labor Statistics reporting the U.S. added 119,000 jobs in September, beating Wall Street’s estimates.
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