By Chuck Mikolajczak
NEW YORK (Reuters) -Global stocks rose for a fifth straight session to an intraday high on Wednesday, while the U.S. dollar also climbed ahead of a policy announcement from the U.S. Federal Reserve and earnings from several U.S. megacap companies.
On Wall Street, U.S. stocks were higher, continuing their recent rally that has pushed major indexes to record levels on cooling trade tensions between the U.S. and China, expectations of a rate cut from the Fed, outsized spending related to artificial intelligence, and a solid start to the corporate earnings season.
Markets are currently pricing in a 97.8% chance of a 25 basis point rate cut by the Fed later today, according to CME’s FedWatch Tool, even as it deals with limited data due to the ongoing U.S. government shutdown.
“This setup where economic growth is good, stocks continue to move higher, but the labor market is weak, kind of is the Goldilocks scenario where the Fed is easing into what is otherwise a pretty solid economic picture,” said Matt Bush, U.S. economist at Guggenheim Investments in New York.
“What changes that is if we do see signs of firming in the labor market, which could be a ways off before we get the official data to show that.”
While there has been a shortage of economic data, including on the labor market, due to the shutdown, a slew of major U.S. companies have announced layoffs, including Amazon and UPS earlier this week.
Investors will closely eye comments from Fed Chair Jerome Powell for signs on the path of interest rates following the policy announcement and any updates on its quantitative tightening (QT) program.
Nvidia became the first company to ascend to the $5 trillion valuation mark on Wednesday, with shares up 4.7% to build on a 5% jump in the prior session after CEO Jensen Huang said the AI chip leader will build seven new supercomputers for the U.S. Department of Energy, and the company has $500 billion in bookings for its chips.
Fellow megacap companies Microsoft, Alphabet and Meta are due to report earnings after the closing bell on Wednesday.
The Dow Jones Industrial Average rose 249.60 points, or 0.53%, to 47,955.97, the S&P 500 rose 22.75 points, or 0.33%, to 6,913.64 and the Nasdaq Composite rose 150.76 points, or 0.63%, to 23,976.73.
The dollar index rose but was weaker against some currencies, as investors awaited Fed Chair Jerome Powell’s outlook for the economy following the central bank’s statement.
The dollar index, which measures the greenback against a basket of currencies rose 0.2% to 98.87, with the euro down 0.15% at $1.1633.
Against the Japanese yen, the dollar weakened 0.06% to 152.01, while sterling weakened 0.5% to $1.3204.
The Canadian dollar strengthened 0.17% versus the greenback to C$1.39 per dollar after the Bank of Canada reduced its key overnight interest rate to 2.25% on Wednesday, as widely expected, and signaled this could mark an end to its cutting cycle unless the outlook for inflation and economy changes.
U.S. President Donald Trump and South Korean President Lee Jae Myung finalized details of their fraught trade deal at a summit in South Korea, and the U.S. president also sounded an optimistic note about a looming summit with China’s Xi Jinping.
In U.S. Treasuries, the yield on benchmark U.S. 10-year notes rose 0.8 basis point to 3.991% as it holds near lows not seen since April while the 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, edged up 0.4 basis point to 3.498%.
U.S. crude advanced 0.42% to $60.40 a barrel and Brent rose to $64.78 per barrel, up 0.59% on the day.
(Reporting by Chuck Mikolajczak; additional reporting by Elizabeth Howcroft in Paris, Ankur Banerjee and Rae Wee in Singapore; Editing by Sharon Singleton and Gareth Jones)
