The major Wall Street indices experienced significant gains on Thursday as investors absorbed the possibility that the Federal Reserve’s aggressive rate hike campaign may be drawing to a close. The Nasdaq Composite closed the session with a 1.15% increase, while the S&P 500 reached a 14-month high with a gain of 1.22%.
According to Ross Gerber, President and CEO of Gerber Kawasaki Inc., the market has already priced in the expectation that the economy will avoid a recession. In a tweet, Gerber stated, “Rally rally as the new bull market gores more bears. Market is saying no recession and the Fed is done.” He also noted that the Federal Reserve is aware that higher rates could have adverse effects on banks.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ) both closed higher, with gains of 1.24% and 1.19% respectively.
Positive economic data also contributed to the optimistic market sentiment following the Fed’s rate hike pause. The U.S. Department of Labor reported that the number of Americans applying for unemployment benefits remained steady at 262,000, aligning with the previous week’s revised higher figure. This data further supported the argument against future rate hikes.
Gerber emphasized the potential benefits of lowering rates, stating that it would stimulate the economy and attract capital back into the market. He also pointed out the significance of the yield on the two-year treasury bill, which indicates the direction in which the Fed should move rates. The 2-year treasury yield decreased from its earlier high of 4.8% to 4.63% before settling at 4.66% on Thursday.
The iShares 1-3 Year Treasury Bond ETF (NASDAQ:SHY) and Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:VGSH) both posted gains of 0.21% and 0.19% respectively, according to Benzinga Pro.
As investors assess the potential implications of the Fed’s rate hike stance and economic indicators, the market rally reflects optimism and the anticipation of lower rates stimulating economic growth in the future.
