Dow Reaches Best Levels Since Early 2022 Amid Ongoing Interest Rate Optimism

After initially showing a lack of direction, stocks have moved mostly higher over the course of the trading session on Friday. The Dow has risen to its best intraday level since early 2022, while the S&P 500 has reached a new four-month intraday high.

The major averages have seen further upside in recent trading, reaching new highs for the session. The Dow is up 190.21 points or 0.5 percent at 36,141.10, the S&P 500 is up 19.73 points or 0.4 percent at 4,587.53 and the Nasdaq is up 38.10 points or 0.3 percent at 14,264.32.

The strength on Wall Street partly reflects ongoing optimism about the outlook for interest rates following the release of a report from the Institute for Supply Management showing a continued contraction in U.S. manufacturing activity in the month of November.

The ISM said its manufacturing PMI came in at 46.7 in November, unchanged from October, with a reading below 50 indicating a contraction. Economists had expected the index to inch up to 47.6.

“The weaker-than-expected ISM survey will reinforce financial markets‘ expectations that the Fed’s next move is a cut,” said Bill Adams, Chief Economist for Comerica Bank.

Meanwhile, traders have shrugged off Federal Reserve Chair Jerome Powell’s comments calling speculation about interest rate cuts “premature” during remarks at Spelman College.

Powell acknowledged recent signs of slowing price growth but said the Fed is committed to keeping monetary policy restrictive until officials are confident inflation is on a path to 2 percent.

“It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease,” Powell said.

Powell stressed the Fed is prepared to tighten policy further if it becomes appropriate, although most economists believe the central bank is done raising rates.

Sector News

Transportation stocks are extending the strong upward move seen on Thursday, driving the Dow Jones Transportation Average up by 2.6 percent to its best intraday level in well over two months.

Considerable strength is also visible among housing stocks, with the Philadelphia Housing Sector Index surging by 2.1 percent to a record intraday high.

Banking stocks are also seeing significant strength on the day, as reflected by the 2.0 percent jump by the KBW Bank Index. The index has reached its best intraday level in almost four months.

Tobacco, steel, oil service and telecom stocks have also shown notable moves to the upside, while software and computer hardware stocks have moved moderately lower

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan’s Nikkei 225 Index slipped by 0.2 percent, while Hong Kong’s Hang Seng Index dove by 1.3 percent.

Meanwhile, the major European markets moved to the upside on the day. While the French CAC 40 Index climbed by 0.5 percent, the U.K.’s FTSE 100 Index and the German DAX Index jumped by 1.0 percent and 1.1 percent, respectively.

In the bond market, treasuries are showing a notable rebound following the pullback seen on Thursday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 10.9 basis points at 4.243 percent.

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