HG MARKETS:

Following the Federal Reserve’s announcement of a 25 basis point (bps) interest rate drop, U.S. equities ended Thursday’s trading session higher, continuing the steep increase that was triggered by Donald Trump’s reelection as president of the United States. In light of a labor market that has “largely eased” and inflation that is still approaching the U.S. central bank’s 2% target, the Fed lowered interest rates by a quarter of a percentage point. A 25 basis point rate drop for the November meeting was nearly fully priced into the market, and it will now watch the central bank’s next remarks for clues about the direction of monetary policy. Each of the three major indexes saw a spike in the previous session due to investor anticipation that Trump would reduce corporate taxes and remove regulations; the Dow Industrials and S&P 500 both saw their biggest one-day percentage increases in two years.

The S&P 500 gained 44.06 points, or 0.74%, to 5,973, the Nasdaq Composite climbed 285.99 points, or 1.51%, to 19,269.46, and the Dow Jones Industrial Average dropped 0.59 points, or flat, to 43,729. S&P sector gains were led by communications services, which were up 1.92%. Warner Bros. Discovery (NASDAQ:WBD) jumped 11.81% on a surprising third-quarter earnings. With banks falling 3.09% following an almost 11% spike on Wednesday, financials was the weakest of the 11 major S&P sectors, down 1.62% to recoup some of the disproportionate gains from the previous session. The Dow was negatively impacted by JP Morgan’s 4.32% loss and Goldman Sachs’ 2.32% share price decline. But as economic data continues to show a robust economy and the possibility of greater inflation due to probable tariffs and increased government expenditure under Trump’s administration, expectations for further rate cuts have recently been lowered.

Fed Chair Jerome Powell stated that the central bank is “prepared to change our view of the right speed and destination” for monetary policy in the face of uncertainty, but that no decision has been made regarding the type of policy action the central bank would take in December. Additionally, investors are watching to see if Republicans can take control of both chambers of Congress, which would facilitate the advancement of Trump’s program. The benchmark 10-year yield dipped from a four-month high of 4.479% on Wednesday, as Treasury yields, which had risen sharply in recent weeks, retreated after a brief easing following the Fed’s speech. The yield was last seen at 4.332%.

U.S. weekly unemployment claims increased slightly last week, according to data released earlier Thursday, indicating no significant shift in the labor market. On the NYSE and the Nasdaq, advancing items exceeded decliners by a ratio of 1.94 to 1 and 1.18 to 1, respectively. The Nasdaq Composite saw 193 new highs and 88 new lows, while the S&P 500 saw 56 new 52-week highs and 4 new lows. In contrast to the average of 12.46 billion shares for the entire session over the previous 20 trading days, the volume on U.S. exchanges was 16.78 billion shares.