Stock Market Today: Stocks extend record run as Fed signals June rate cut

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U.S. equity futures extended gains Thursday, following on from last night's record high close for all three major benchmarks, as investors parsed details of yesterday's dovish Federal Reserve interest-rate decision while eyeing another move higher in semiconductor stocks tied to better-than-expected earnings from Micron Technology (MU) .

Updated at 8:39 AM EDT

Still solid

Around 210,000 Americans filed for new unemployment benefits over the week ending on March 16, the Labor Department reported, down 212,000 from the prior period and again below the Street's 215,000 forecast.

The Philadelphia Fed's regular survey of mid-Atlantic business conditions, meanwhile, surprised to the upside, suggesting the economy held onto its solid, but by no means spectacular, momentum into the final month of the quarter.

US Initial Jobless Claims Mar 16: 210K (est 213k; prevR 212k)
- Continuing Claims Mar 9: 1807K (est 1820k; prevR 1803k)— LiveSquawk (@LiveSquawk) March 21, 2024

Updated at 8:06 AM EDT

Bank of England hold

The Bank of England held its key policy rate steady at 5.25%, the highest level since the global financial crisis of 2008, and said elevated price pressures would require a restrictive policy stance over the coming months but added that inflation is "heading in the right direction".

As widely anticipated, the @BankOfEngland left interest rates unchanged.
The spotlight now is on the commentary, including the extent to which it correlates with yesterday’s dovish tone and content from #FederalReserve Chair Jerome Powell.#economy #centralbanks #markets— Mohamed A. El-Erian (@elerianm) March 21, 2024

Stock Market Today

Stocks powered firmly higher into the close of trading Wednesday, while Treasury bonds rallied and the dollar slumped, after the Fed held its key lending rate steady at between 5.25% and 5.5% but reiterated its forecast for around three rate cuts later this year. 

The rate cut forecast, tied to the Fed's new quarterly Summary of Economic Projections, provided the key trigger for the record-setting rally, with traders added to bets on a June reduction following comments from Chairman Jerome Powell during his question-and-answer session with reporters in Washington.

Powell said that while inflation data over the first months of the year had come in hotter than expected, they "haven’t really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road toward 2%."

"I don’t think that story has changed," he added. "I also don’t think that those readings added to anyone’s confidence that we’re moving closer to that point."

Despite his attempt to present a balanced set of inflation risks, traders now see a near 74% chance that the Fed will start cutting rates in June, based on CME Group's FedWatch data. Traders are matching the Fed's forecasts for three rate cuts between now and the end of the year.

Bill Adams, chief economist for Comerica Bank in Dallas, said Powell's message was "consistent with his testimony to Congress earlier this month," adding that he expects the first of three cuts to arrive in June.

Benchmark 10-year Treasury-note yields, meanwhile, tumbled 8 basis points from yesterday's pre-decision levels to around 4.227% in early New York trading. Two-year notes were pegged at 4.566%.

The dollar index was marked 0.42% lower against a basket of its global peers at 103.403. Traders were tracking a surprise rate cut from the Swiss National Bank, the first in nine years, and today's policy decision from the Bank of England later today in London.

On Wall Street, stocks are set for another record open, with futures contracts tied to the S&P 500 indicating a 23 point opening bell gain and those linked to the Dow Jones Industrial Average, which ended 401 points higher last night, looking at a 120 point advance.

The tech-focused Nasdaq is set for a gain of around 145 points, with a 17% surge in Micron, and broader gains in the chip sector. That's offset partly by a 1.1% decline in Apple  (AAPL)  tied to reports of an antitrust suit brought by the Department of Justice.

In overseas markets, Wall Street's Wednesday rally helped the Nikkei 225 to a record, with the benchmark rising 2.03% to close at 40,815.66 points, while the regionwide MSCI ex-Japan index gained 2% into the close of trading.

In Europe, the regionwide Stoxx 600 gained 0.52% in early Frankfurt trading as the Swiss National Bank rate decision supported bets of a European Central Bank rate cut later this spring. The FTSE 100 gained 0.93% ahead of the Bank of England rate decision later this morning in London.

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