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Wall Street gains as weak services data raises rate-cut expectations

Published 10/03/2019, 04:26 PM
Updated 10/03/2019, 04:26 PM
© Reuters. Traders work on the floor at the NYSE in New York

© Reuters. Traders work on the floor at the NYSE in New York

By Noel Randewich

(Reuters) - Wall Street stocks climbed on Thursday after data showing U.S. services-sector activity at a three-year low fueled expectations that the Federal Reserve would cut interest rates to stem a wider economic downturn.

Microsoft (O:MSFT) rose 1.2% and Facebook (O:FB) added 2.7%, with the two contributing more than any other companies to the S&P 500's gain.

The market dropped after the Institute for Supply Management (ISM) said its non-manufacturing activity index fell to a reading of 52.6 in September, the lowest since August 2016.

That added to fears sparked on Tuesday when a report showed U.S. factory activity contracted to its lowest level in more than a decade, as well as data on Wednesday showing private payrolls growth in August was not as strong as previously estimated.

Stock prices bounced back from the dour economic data as bets on a third U.S. rate cut this year at Fed's October policy meeting surged to 90% from 40%, according to CME Group's Fed Watch tool.

"The degradation of the data, especially the non-manufacturing data, kind of pushes the Fed to another cut," said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.

Traders are again expecting at least two more rate reductions by the end of 2019, which they had abandoned after the central bank described each of its last two rate cuts as a "mid-cycle adjustment." [MMT/]

"We are at a critical point. Global growth is slowing and U.S. growth is decelerating because of trade disputes and uncertainty caused by trade policy," said Ben Phillips, chief investment officer at EventShares. "But the market loves easy money, and when it gets a whiff of it, it gets high."

A pivotal jobs report on Friday may contribute more evidence of whether the U.S.-China trade war is pushing the world's largest economy toward a recession.

The Dow Jones Industrial Average (DJI) rose 0.47% to end at 26,201.04, while the S&P 500 (SPX) gained 0.80% to 2,910.63.

The Nasdaq Composite (IXIC) added 1.12% to end the session at 7,872.27.

Over the past 12 months, the S&P 500 is down about 0.5%.

PepsiCo Inc (O:PEP) on Thursday rose 3% after beating quarterly expectations as higher advertising and new low-calorie versions of Gatorade boosted demand for its beverages in North America.

Its shares pushed the S&P consumer staples index (SPLRCS) 0.7% higher. All of the 11 major sectors rose, led by a 1.3% rise in the energy index (SPNY).

Corona maker Constellation Brands Inc (N:STZ) fell 6.1% after it took an $839 million markdown in the value of its investment in pot firm Canopy Growth (TO:WEED) during the quarter.

Advancing issues outnumbered declining ones on the NYSE by a 1.80-to-1 ratio; on Nasdaq, a 1.56-to-1 ratio favored advancers.

The S&P 500 posted 9 new 52-week highs and 20 new lows; the Nasdaq Composite recorded 6 new highs and 109 new lows.

© Reuters. Traders work on the floor at the NYSE in New York

Volume on U.S. exchanges was 7.1 billion shares, compared with the 7.3 billion average for the full session over the last 20 trading days.

Latest comments

Soo much easy money out there, going to take awhile to work all the suckers out of the system
Ao confirmation of slowndown and bad data re-re cinfirmed and a probable bailout spikes mkt,,,,, ahh hhh cant make this stuff up
If the explanation given by the article is valid,  the FX market  which is far more sensitive to interest rate changes expectations would move the dollar immediately down , and this didn't happen.......
Two words... “Market Manipulators”
ISM numbers are actually not bad
Free money....very FUNNY !!!! HEHEHE!
Oh yeah. Let’s make more money!
Everything looks bad, which makes it good!
yes baby and we are cashing real good.
The Fed can't do anything this late in the debt cycle.
They well cut till zero.
Then the crash comes... It's sooner than we think especially after the elections
how is the market going up? an hour ago i was $1k up now I'm down for the day. that means i lost the $1k gain and then lost more. I'm betting against the s&p
Me too the are betting on Future cuts but the fact is that the economy is going to *****and selling stocks for safe haven is what is gonna happen next week
i only buy negatives
how is it Trump's fault? he made the market go higher than it should be... this crash has been in the making for a while bc of decade plus low interest rates and non stop QE.... nothing to do with Trump
Jesus I hope you're kidding
the Trump recession is coming, loudly applauded by his deplorables (they know not better)
hold on chill there is several factor in place and rabid democrats don t help
how to help someone who is messing up the whole world???
Trump is making America great again, great recession
 But it is his fault to attack Japan, Mexico, EU, and China simultaneously with that "America first" mentality. He never realized that globalization is the solution to the problems caused by globalization, not nationalism! We will see, it is going to be ugly with the trade talk.
Yup, just just keep the trade imbalance in place and let those other countries continue to take advatage of the US generosity.
No, go study and pay attention to the world around you
time to update the headline
300 down and counting
Steady??
Wow - 200 steady
bed bath and beyond closing stores, tesla falling short by thousands of units, tariffs going into effect on the EU, etc. the market will only go up with more buy backs. of these companies stop buy backs then the market crashes
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