[New York Stock Market] New York Stocks Rise Together on 'Big Cut' Expectations... Best Week of the Year

Ahead of the U.S. Federal Open Market Committee (FOMC) meeting, expectations for a rate cut were maintained, leading to a broad rise in the New York stock market.

A trader is looking at the ticker board at the New York Stock Exchange (NYSE) in the United States. [Image source=Yonhap News]

On the 13th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 41,393.78, up 297.01 points (0.72%) from the previous session. The Standard & Poor's (S&P) 500 index rose 30.26 points (0.54%) to 5,626.02, and the Nasdaq Composite Index closed at 17,683.98, up 114.30 points (0.65%) from the previous session.

Notably, the S&P 500 index rose 4.02% this week, marking its highest weekly gain since early November 2023. The Nasdaq index also surged 5.95% this week, achieving its highest weekly return since early November last year.

The rally was supported by expectations of a rate cut. There is growing anticipation that the Federal Reserve (Fed) will implement a big cut (50 basis points) at next week's meeting, which appears to have boosted market momentum. A lower benchmark interest rate benefits technology and blue-chip stocks that lead the U.S. stock market.

According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market priced in a 51% probability of a 50 basis point rate cut at the September FOMC meeting. This is a sharp increase from around 15% the previous morning to over 50% within a day.

Expectations rose further after current and former Fed officials hinted at the possibility of a big cut through some media outlets. William Dudley, former president of the New York Federal Reserve Bank, also supported the 50 basis point cut. At the Bretton Woods Forum held in Singapore the day before, Dudley said, “There is a strong argument to advocate for a 50 basis point cut,” adding, “If it were me, I would know what I would pursue.”

Microsoft, Alphabet, Tesla, and Broadcom showed strength. Semiconductor and artificial intelligence-related stocks also generally performed well, with ASML rising more than 2% and AMD up over 1%. In contrast, Apple, Amazon, Nvidia, and Meta Platforms closed slightly lower. Adobe, which had been strong as an AI-themed stock, plunged more than 8% after disappointing Q4 earnings guidance. Boeing’s stock fell over 3% as its factory union went on strike. Furniture retailer RH surged 25% on better-than-expected earnings.

Many blue-chip stocks also rose on rate cut expectations. Walmart gained 1.18%, and McDonald's rose 1.43%. Procter & Gamble, Johnson & Johnson, and Coca-Cola also showed strength. Among the 11 sectors comprising the S&P 500, utilities, real estate, and consumer staples hit 52-week highs.