Wall Street closed higher on Thursday buoyed by multi-interest rate cut indication given by the Fed in its December FOMC meeting. Moreover, several strong economic data of November eliminated the fear of a recession in 2024 thereby boosting the possibility of a soft landing of the U.S. economy. All three major stock indexes ended in positive territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) advanced 0.4% or 158.11 points to close at 37,248.35, marking its highest closing historically. In intraday trading, the blue-chip index recorded its historical high of 37,287.50. Notably, 16 components of the 30-stock index ended in positive territory, while 14 ended in negative zone.

The tech-heavy Nasdaq Composite finished at 14,761.56, rising 0.2% due to strong performance of large-cap technology stocks. The major gainer of the tech-laden index was Lucid Group Inc. (LCID Quick QuoteLCID - Free Report) . The stock price of the company soared 14.5%. Lucid Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The S&P 500 gained 0.3% to finish at 4,719.55. Seven out of 11 broad sectors of the benchmark ended in positive territory while four in negative zone. The Energy Select Sector SPDR (XLE), the Real Estate Select Sector SPDR (XLRE) and the Materials Select Sector SPDR (XLB) rose 2.9%, 2.7% and 1.8%, respectively, while the Consumer Staples Select Sector SPDR (XLC) tumbled 1.5%.

The fear-gauge CBOE Volatility Index (VIX) was up 2.4% to 12.48. A total of 17.1 billion shares were traded on Thursday, higher than the last 20-session average of 11.1 billion. Advancers outnumbered decliners on the NYSE by a 1.9-to-1 ratio. On Nasdaq, a 1.5-to-1 ratio favored advancing issues.

Fed Keeps Policy Rate Unchanged

Stocks rallied on previous two days after the Federal Reserve kept its benchmark policy rate steady at in the range of 5.25-5.5%. Market participants were hopeful that the Fed would keep the interest rate unchanged in its December FOMC meeting although it has earlier hinted at another 25-basis point rate hike this year.

However, cooling inflation over the past year raised hopes that the Fed could soon end its monetary tightening campaign. The Fed’s decision was widely expected but more importantly, the central bank hinted at multiple rate cuts in 2024.

The Fed hinted at three 25 basis point rate cuts in 2024, higher than its earlier projection of two. Although the Federal Reserve didn’t give an exact time when it plans to start its rate cuts, the indication was enough to send stocks on a rally.

Fed Reserve Chairman Jerome Powell said at a press conference that he believes that the policy rate is now at its peak or at least near it. He also said that the central bank will closely watch inflation data and will try not to keep interest rates higher for a longer period. The Fed now expects its policy rate at 4.6% by the end of 2024, a lot lower than the earlier forecast of 5.1%.

Economic Data

The Department of Commerce reported that retail sales grew 0.3% in November, beating the consensus estimate of 0.1%. The metric for October was revised downward to a decline of 0.2% from a drop of 0.1% reported earlier. Year over year, retail sales climb 4.1% in November.

The core retail (excluding auto) sales grew 0.2% in November, in line with the consensus estimate. The metric for October was revised upward to a break-even from a drop of 0.1% reported earlier. Excluding auto and gas, retail sales grew 0.6% in November.

The Department of Labor reported that weekly jobless claims decreased by 19,000 to 202,000 for the week ended Dec 9, lower-than the consensus estimate of 220,000. Previous week’s data was revised upward to 221,000 from 220,000 reported earlier. Continuing claims — people who already received government unemployment benefit and run a week behind the headline number — came in at 1.876 million for the week ended Dec 2, an increase of 20,000 from the previous week.