U.S. stocks remained near record highs on Thursday, with the S&P 500 finishing virtually unchanged. The Dow Jones Industrial Average set a new record, adding 161 points, while the Nasdaq composite was close to flat. Strong performance from companies in the chip industry, such as Nvidia, helped push the market higher after Taiwan Semiconductor Manufacturing Co. reported better-than-expected profits. However, declines in Alphabet and Elevance Health kept indexes in check.
In the bond market, Treasury yields rose following positive reports on the U.S. economy, including strong retail sales in September and a decrease in unemployment benefit applications. These reports indicate low layoffs and a healthy job market, strengthening the belief that the economy can continue to grow without a recession. The Federal Reserve’s decision to cut interest rates is also seen as a positive signal for stocks to rise even further, despite concerns about overvalued stock prices compared to company profits.
While critics warn that stock prices may be too high given the rapid climb without matching profit growth for companies, lower interest rates can stimulate economic growth, boost investment prices, and reduce borrowing costs for households and businesses. Globally, interest rates are decreasing, with the European Central Bank cutting its main rate. Stock indexes in France and Germany rose following this announcement, reversing losses in Asian markets earlier in the day.
On Wall Street, several companies contributed to the market’s performance, including Travelers and Blackstone, which reported stronger-than-expected profits. Travelers saw increased income from investments despite losses from natural disasters, while Blackstone reported accelerating growth across its businesses. However, companies like Elevance Health and CSX faced challenges, with Elevance Health reporting weaker profits than expected and cutting its full-year forecast, while CSX fell short of profit expectations for the quarter.
Overall, the S&P 500 dipped slightly, while the Dow set a new record and the Nasdaq remained stable. In the bond market, Treasury yields rose, signaling a shift in expectations for the Fed’s future interest rate actions. Traders are now betting on a traditional-sized rate cut rather than a larger one in November. This change in expectations has led to higher Treasury yields. The strong performance of the U.S. economy and positive signals from the Federal Reserve continue to drive optimism in the stock market despite concerns about valuations and profit growth.
Contributors to this article include AP Business Writers Matt Ott and Elaine Kurtenbach. The overall sentiment in the market remains positive, with investors hopeful for continued economic growth and further gains in the stock market.
