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However, the index cooled off nearly 450 points from the day’s high, barely managing to close above the flat line. The S&P 500 and the Nasdaq had no such luck, as a 70 and 250-point drop from their respective day’s high meant a close below the flatline for these indices.
The US 10-year Treasury yield rose to 4.57%, a level last seen in May. A Bloomberg dollar index continued to hover around 2022 highs. The yen remained lower after the Bank of Japan left borrowing costs unchanged earlier. Mexico’s peso shrugged off losses after the country’s central bank delivered a fourth consecutive rate cut.
The US economy remains resilient, as data on Thursday continued to prove. Notably, one of the Fed’s preferred gauges of inflation was revised up to 2.2%. Given that Chair Jerome Powell said future easing would require fresh progress on inflation, markets will now be closely watching the last noteworthy piece of data for the year — personal consumption expenditures for November — due Friday.
For now, investors are being defensive, said Matt Maley, chief market strategist at Miller Tabak + Co.
“They’re not jumping back into the market with both feet,” he said. “So, if we don’t get some relief from the bond market soon, there might not be a Santa Claus rally this year.”
The swaps market is now implying fewer than two quarter-point reductions for the entirety of 2025, even less than what was implied in the Fed’s so-called dot plot on Wednesday.
Traders also parsed gross domestic product numbers on Thursday. The data showed that the US economy expanded at a faster clip in the third quarter than previously expected. Consumer spending was also marked up. Applications for US unemployment benefits fell last week amid volatility seen during the holiday season. Existing-home sales in the US topped a rate of 4 million in November for the first time in six months.
All eyes will be on the Personal Consumption Expenditure (PCE) data later this evening which is the Fed’s preferred inflation gauge.
(With Inputs From Agencies.)
