Stock Market Update: Wall Street Holds Near Records, Japanese Stocks Climb

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Wall Street is hovering near record highs, buoyed by optimism that the moves made by Japan’s central bank to maintain investor-friendly interest rates could serve as a potential indicator for the global market. Early on Tuesday, the S&P 500 saw a 0.2% increase, just 1% away from its record set almost two years ago. The Dow rose by 54 points, and the Nasdaq composite posted a 0.3% gain. In global markets, there was a mix of performances, except in Japan, where the Nikkei 225 surged by 1.4% following the central bank’s decision to keep its benchmark rate below zero, aiming to stimulate increased borrowing and spending.

Wall Street made modest gains on Tuesday as the stock market approaches the end of 2024 on a seven-week winning streak. Before the bell, futures for the S&P 500 and the Dow industrials each rose by 0.2%.

Last week, the broader market experienced a surge, building on solid gains from December. The Federal Reserve’s indication that inflation might have cooled sufficiently for the central bank to consider cutting interest rates in 2024 contributed to the positive momentum. The Dow closed the week at a record high, and the S&P 500 marked its longest weekly winning streak in six years, edging closer to its all-time high.

The S&P 500 has gained over 23% this year, while the Nasdaq has seen an increase of more than 42%.

Lower interest rates typically relieve pressure on financial markets. Since 2022, the Fed’s objective has been to slow the economy and reduce investment prices through high-interest rates, aiming to control inflation. Economic growth has slowed, but a recession has been avoided, and inflation continues to ease.

Investors are speculating that the Fed has concluded its interest rate hikes and might consider cutting rates in early 2024. The last significant update on inflation for the year is expected on Friday when the government releases its report on personal consumption expenditures, the Fed’s preferred inflation measure.

Analysts predict a softening of the inflation measure to 2.8% in November, down from October’s 3%.

This week, investors will review several significant earnings reports to gauge how companies and consumers are faring amid high-interest rates and lingering inflation. FedEx will report its financial results on Tuesday, General Mills on Wednesday, and Nike on Thursday.

After a 26% surge on Monday following news of its sale to Nippon Steel, U.S. Steel is slightly down before Tuesday’s opening bell.

U.S. Sen. John Fetterman has expressed concern about the sale based on national security issues, pledging to use his platform to block it.

In European midday trading, Germany’s DAX gained 0.5%, the FTSE 100 in London remained essentially unchanged, and the CAC 40 in Paris ticked up 0.1%.

Tokyo’s Nikkei 225 index rose by 1.4% to 33,219.39 after the Bank of Japan kept its ultra-lax monetary policy unchanged, as expected. The dollar strengthened against the yen, rising to 144.59 yen from 142.79.

Sydney’s S&P/ASX 200 added 0.8%, while Seoul’s Kospi edged 0.1% higher. Hong Kong’s Hang Seng index declined by 1%, and Shanghai’s Composite index gained less than 0.1%.

Early Tuesday, the yield on the 10-year Treasury fell to 3.90% from Monday’s 3.95%.

U.S. benchmark crude oil was down 25 cents at $72.57 per barrel, and Brent crude, the international standard, shed 26 cents to $77.69 per barrel.

The euro rose to $1.0972 from $1.0925 late Monday. On Monday, the S&P 500 rose by 0.5%, the Nasdaq composite by 0.6%, and the Dow Jones Industrial Average finished essentially flat after most of a 0.2% gain faded by late afternoon.

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About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.