US STOCKS-Wall Street rises as traders temper bets on aggressive rate hikes
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* Weekly jobless claims rise unexpectedly
* GameStop wins on stock split
* Samsung results boost chipmakers
* Indices up: Dow 0.93%, S&P 1.25%, Nasdaq 1.85% (add comment, update prices)
By Amruta Khandekar and Bansari Mayur Kamdar
July 7 (Reuters) – Major Wall Street indexes rose on Thursday on expectations that the U.S. Federal Reserve would slow the aggressive pace of interest rate hikes later this year amid growing fears of a recession.
US stock markets stabilized in July after a sharp selloff in the first half amid soaring inflation, the conflict in Ukraine and the Fed’s move away from easy money policy.
The benchmark S&P 500 index is up 2.8% so far this month, including session gains, after posting its biggest first-half percentage decline since 1970.
Minutes of the central bank’s June monetary policy meeting, in which the Fed raised interest rates by three-quarters of a percentage point, showed a firm reaffirmation on Wednesday of its intention to rein in the costs.
However, Fed officials acknowledged the risk that rate hikes would have a “bigger than expected” impact on economic growth and said a 50 or 75 basis point hike would likely be appropriate at the meeting. July policy.
“(Rate hike) expectations for the July meeting haven’t changed much, but expectations later in the year are coming down a bit,” said Michelle Cluver, portfolio strategist at Global X ETFs.
Although investors widely expect the Fed to hike rates another 75 basis points in July, expectations for the peak terminal rate next year have fallen significantly amid growing concerns about a slowdown. global economy.
Fed funds futures traders expect the benchmark rate to peak at 3.44% in March. Prior to the June meeting, it was expected to drop to around 4% by May. It is currently 1.58%. .
Goldman Sachs forecasts a 75 basis point rate hike this month, a 50 basis point hike in September and 25 basis point hikes in November and December.
A report on Thursday showed the number of Americans filing new claims for unemployment benefits unexpectedly rose last week and demand for labor is slowing, with layoffs hitting a 16-month high in June.
A closely watched jobs report on Friday is expected to show nonfarm payrolls likely increased by 268,000 jobs last month after rising by 390,000 in May.
As of 12:07 p.m. ET, the Dow Jones Industrial Average was up 287.57 points, or 0.93%, at 31,325.25, the S&P 500 was up 48.06 points, or 1.25%, at 3,893.14, and the Nasdaq Composite was up 210.28 points, or 1.85. %, at 11,572.13.
GameStop Corp rose 8.5% as the video game retailer’s board approved a four-for-one stock split.
Intel Corp, Nvidia Corp and Qualcomm Inc gained after South Korea’s Samsung Electronics posted its best second-quarter profit since 2018, driven by strong memory chip sales.
The broader Philadelphia SE Semiconductor index climbed 4%.
Advancing issues outnumbered declining issues with a ratio of 4.00 to 1 on the NYSE and 3.53 to 1 on the Nasdaq.
The S&P index recorded two new 52-week highs and 29 new lows, while the Nasdaq recorded 20 new highs and 44 new lows. (Reporting by Amruta Khandekar and Bansari Mayur Karmdar in Bengaluru; Additional reporting by Devik Jain, Editing by Shounak Dasgupta and Anil D’Silva)