U.S. Stocks Rise as Investors Bet on Imminent Interest Rate Cuts

BY COMFORT OGBONNA

U.S. stocks climbed on Wednesday, edging closer to their record highs as mixed economic data strengthened hopes that the Federal Reserve could soon lower interest rates. The movement across major indexes reflected growing optimism that cooling inflation and signs of a weakening job market may prompt policymakers to take action.

The S&P 500 rose 0.3%, bringing it within 0.6% of its all-time high set in late October. The Dow Jones Industrial Average gained 408 points, or 0.9%, while the Nasdaq composite added 0.2%. Despite the modest overall moves, several companies posted significant gains that helped support the broader market.

Microchip Technology led the S&P 500’s advance with a sharp 12.2% jump after announcing that fourth-quarter sales and profits are expected to hit the top of earlier projections. CEO Steve Sanghi said business conditions have improved more than anticipated, and inventory levels are trending lower—two developments that energized investor confidence.

Marvell Technology also delivered a strong performance, rising 7.9% after reporting better-than-expected quarterly profits. CEO Matt Murphy pointed to growing demand for data-center products and revealed that the company would acquire Celestial AI to strengthen its artificial-intelligence infrastructure division. The acquisition could exceed $3.25 billion, signaling a major investment in future AI technologies.

Stocks across the board benefited from easing Treasury yields after new data suggested private-sector employers may have cut more jobs in November than they added. While the report painted a challenging picture for job seekers, investors saw it as another sign that the Federal Reserve may be preparing to reduce interest rates as early as next week. If enacted, this would mark the third rate cut of the year aimed at supporting the cooling labor market.

Lower interest rates tend to raise asset prices and stimulate economic activity, making them popular among investors. Another economic report, this one from the Institute for Supply Management, offered more upbeat news by showing stronger-than-expected growth in the U.S. services sector. It also signaled that price increases slowed to their lowest rate since April, helping neutralize concerns that rate cuts could reignite inflation.

The yield on the 10-year Treasury slipped to 4.06% from 4.09% the previous day as bond traders reacted to the new data. Falling yields provided further support for risk assets. Bitcoin also joined the rebound, climbing above $93,000 after suffering a steep drop last month that briefly sent it below $81,000.

Several individual stocks made notable moves. American Eagle Outfitters rallied 15.1% following a stronger-than-expected profit report and early signs of robust holiday shopping activity. CEO Jay Schottenstein said demand surged across brands over the Thanksgiving weekend, giving investors renewed optimism for the retail sector.

Capricor Therapeutics delivered one of the most dramatic market reactions of the day, soaring an astonishing 371.1% after unveiling promising results for a potential Duchenne muscular dystrophy treatment.

Still, not all major names gained ground. Roughly one-third of the S&P 500 finished lower, including some of its most influential stocks. Microsoft fell 2.5%, weighing heavily on the index. Macy’s slipped 1.1% despite reporting a quarterly profit that far exceeded expectations. Its shares have already logged impressive gains this year, more than doubling the S&P 500’s performance, which may have contributed to the muted reaction.

By the close of trading, the S&P 500 rose 20.35 points to 6,849.72. The Dow climbed to 47,882.90, and the Nasdaq advanced to 23,454.09.

Overseas markets saw mixed results. European indexes were mostly flat, while Asia delivered a varied performance. Japan’s Nikkei 225 surged 1.1%, powered by strength in technology stocks like Tokyo Electron. SoftBank Group jumped 6.4% amid reports that founder Masayoshi Son expressed regret over selling shares of Nvidia to support other investments. In contrast, Chinese markets fell following newly released data indicating weakening factory activity, with Hong Kong down 1.3% and Shanghai slipping 0.5%.