On Thursday (November 2nd), due to the actions of the Federal Reserve and the Bank of England, traders doubled their bets that global interest rates may eventually peak, and the stock market continued its upward trend.
As of press release, the Dow Jones Industrial Average rose 0.89%. The Standard&Poor's 500 Index and Nasdaq Composite Index rose 1.15% and 1.12% respectively.
On Thursday, as widely expected, Bank of England policy makers held their second consecutive meeting on Thursday to keep the benchmark interest rate unchanged at 5.25%, but stated that they do not expect policy relaxation soon.
Although neither the Federal Reserve nor the Bank of England have expressed the possibility of a rate cut soon, after 20 months of relentless rate hikes, just seeing the dawn at the end of the tunnel is enough to revitalize bulls.
This rise is broad-based, with all 11 sectors of the S&P 500 index showing positive values. Real estate, non essential consumer goods, and materials led gains, all exceeding 1%. After Moderna reported a significant loss in the third quarter, the company's stock price plummeted by about 10%.
Thursday's rise is expected to bring the S&P 500 and Dow to their largest weekly gains of the year.
Bond yields declined, including the yield of 10-year treasury bond bonds dropped by about 14 basis points to 4.65%. This occurred after the benchmark yield broke through 5% last month.
Bank of England Governor Bailey attempted to emphasize that "it is still too early to consider lowering interest rates".
Samuel Zief, head of global foreign exchange strategy at JPMorgan Chase Private Bank in London, said, "They may sit on the 'Table Mountain' for a period of time, and we believe that the next step for the Bank of England will be to lower interest rates." He referred to the Bank of England maintaining interest rates at the current 5.25%.
The Federal Reserve's assessment of the US economy was made after keeping interest rates unchanged again on Wednesday and increasing its assessment.
Chris Zaccarelli, Chief Investment Officer of the Alliance of Independent Advisers, said, "Powell made every effort to prevent the market from seeing two consecutive 'skipping' rate hikes as a green light for risky assets. We are surprised by his detailed wording, which states that the Federal Reserve is still concerned about inflation and will not hesitate to raise rates again in the near future
On Thursday morning, investors digested further signs of weak inflation and loose labor markets. In the third quarter, labor costs decreased by 0.8%, while economists surveyed by Dow Jones expect labor costs to increase by 0.7%.
As of the week ending October 28th, the number of initial claims for unemployment benefits on Thursday rose to 217000, higher than the previous week's 210000 and Dow Jones' consensus expectation of 214000.
Gold prices fluctuated on Thursday, stabilizing above 1990 after the release of US initial data. However, an increase in risk appetite limited gold's growth. As of press release, spot gold is currently trading at $1982.76 per ounce.
It is worth noting that gold used to preserve wealth during periods of economic and political uncertainty rose by over 7% in October, as the war between Israel and Hamas boosted safe haven bets. The metal has risen above the critical psychological level of $2000 for the first time since May.
Nitesh Shah, commodities strategist at WisdomTree, said, "Gold has a long history as a geopolitical hedge worker and its performance is truly worthy of its name
Carsten Menke of Swiss bank Baptist Bank stated, "Only in the event of a severe slowdown in the US economy leading to a more prolonged and widespread recession, can it be possible to return to historical highs.
