Stock market news today: Fed-fueled rally carries stocks higher

US stocks rose on Thursday as interest rate sensitive areas of the market rallied in the wake of the Federal Reserve's pivot to more rate cuts in 2024.

The Dow Jones Industrial Average (^DJI) rose 0.4% or more than 150 points, while the S&P 500 (^GSPC) popped over 0.2%. The tech-heavy Nasdaq Composite (^IXIC) added 0.2%. The Dow Jones set a new all time high for the second-straight day.

On Wednesday, the Fed's final policy decision of 2023 signaled the central bank is unlikely to hike interest rates further and could even cut rates three times next year. The news sparked a rally in the Real Estate sector which rose nearly 3% on Thursday.

Bank stocks also soared with Bank of America (BAC), Goldman Sachs (GS) and Morgan Stanley (MS) all rallying roughly 6%. The small cap Russell 2000 Index (^RUT) also popped more than 2.5%.

Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards

Bonds rallied alongside stocks, sending the yield on the 10-year Treasury (^TNX) down below 4% on Thursday for the first time since August.

Meanwhile, oil prices moved up more than 3%, rebounding from the five-month low hit earlier this week. West Texas Intermediate (CL=F) futures traded at almost $72 a barrel, while Brent crude futures (BZ=F) rose nearly $77 a barrel.

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Stocks extend rally as interest rate sensitive sectors surge

Thu, December 14, 2023 at 4:06 p.m. EST, Josh Schafer

US stocks rose on Thursday as interest rate sensitive areas of the market rallied in the wake of the Federal Reserve's pivot to more rate cuts in 2024.

The Dow Jones Industrial Average (^DJI) rose 0.4% or more than 150 points, while the S&P 500 (^GSPC) popped over 0.2%. The tech-heavy Nasdaq Composite (^IXIC) added 0.2%. The Dow Jones set a new all-time high for the second-straight day.

The interest rate sensitive Real Estate sector led the market action on Thursday, rising nearly 3%. The Russell 2000 (^RUT), which had reversed all of its post-pandemic gains earlier this year over fears of higher rates, is now up more than 11% in the last month alone.

The S&P regional bank index (KRE) has risen more than 20% over the past the month, including a nearly 5% gain on Thursday. Cathie Wood's flagship Ark Innovation ETF (ARKK) was up almost 4% on Thursday alone.

Big Bank stocks also soared with Bank of America (BAC), Goldman Sachs (GS), and Morgan Stanley (MS) all rallying roughly 6%.

JPMorgan team ditches bullish view on building products sector

Thu, December 14, 2023 at 2:59 p.m. EST, Dani Romero

JPMorgan analysts have softened their bullish view on building products as demand for new home construction continues to define the housing market over existing homeowners remodeling.

Analysts led by Michael Rehaut wrote in a note to clients the firm now favors "names with higher exposures towards new residential construction, which has rebounded this year, compared to companies with higher exposures to the residential repair/remodel market, as single-family existing home sales ... have continued to decline over the past several months."

In its note, the firm upgraded shares of TopBuild (BLD) and Installed Building Products (IBP) to Overweight from Neutral while cutting its recommendation on Stanley Black & Decker (SWK) to Underweight.

Shares of TopBuild and Installed Building were up more than 10% on Thursday while Stanley Black & Decker stock rose as much as 5%.

Housing-related plays across the market received a boost following the Fed's signal that it is unlikely to further hike interest rates and could cut rates three times in the upcoming year.

Overall, 2023 has been a strong year for homebuilding-related plays, with JPMorgan noting the overall homebuilding universe of stocks is up nearly 70% this year while building products plays are up a more measured 55%. Compared to 2021, however, this universe of stocks remains below its highs.

Expectations for fourth quarter GDP jump

Thu, December 14, 2023 at 2:36 p.m. EST, Josh Schafer

The latest projections for fourth quarter economic growth are moving higher.

The Atlanta Fed's GDPNow tracker is now projecting Gross Domestic Product (GDP) grew at a 2.6% annualized rate in the fourth quarter. Just a week ago, the tracker had projected 1.2% growth for the fourth quarter.

The move higher comes as recent economic data has come in better than economists expected. New data out from the Census Bureau Thursday showed retail sales grew 0.3% in November. Economists had expected a 0.1% decline.

The Atlanta Federal Reserve's projections for fourth quarter economic growth popped on Thursday after positive surprises in recent economic data. (Federal Reserve Bank of Atlanta)

Disney's proxy battle heats up as Trian reveals board nominations

Thu, December 14, 2023 at 1:45 p.m. EST, Alexandra Canal

Trian Fund Management plans to nominate its founder Nelson Peltz and former Disney (DIS) CFO Jay Rasulo to the media giant's board, the activist hedge fund said in a press release on Thursday.

Rasulo worked alongside Disney CEO Bob Iger as his chief financial officer from 2010 to 2015. He was chairman at Walt Disney Parks and Resorts Worldwide from 2005 to 2009 and also served as president of Walt Disney Parks and Resorts from 2002 to 2005.

"The Disney I know and love has lost its way," Rasulo said in the release. "As independent voices in the boardroom, Nelson and I are confident that the combination of my decades of experience at Disney, Nelson’s significant boardroom skills and history of driving positive strategic change, and our combined consumer brands expertise and financial acumen, will be additive to the Disney Board."

Rasulo is the second former Disney exec to publicly join Peltz in his push for a board shakeup. Former Marvel executive Ike Perlmutter has entrusted his stake in the company to Peltz, making up the bulk of Trian's 30 million-plus shares in the entertainment giant.

Trian Fund Management plans to nominate its founder Nelson Peltz and former Disney CFO Jay Rasulo to the media giant's board (Courtesy: Reuters)

Disney responded to Trian's nominations with a statement of its own, writing, "Disney has an experienced, diverse, and highly qualified Board that is focused on the long-term performance of the Company, strategic growth initiatives including the ongoing transformation of its businesses, the succession planning process, and increasing shareholder value."

"The Governance and Nominating Committee, which evaluates director nominations, will review the proposed Trian nominees and provide a recommendation to the Board as part of its governance process," the statement continued.

Shares ticked up as much as 2% following the news.

Read more here.

Mortgage rates fall below 7% for the first time since August

Thu, December 14, 2023 at 1:16 p.m. EST, Josh Schafer

Mortgage rates fell below 7% for the first time since August on Thursday but the positivity doesn't end there.

With markets now expecting the Federal Reserve to cut interest rates several times in 2024, the outlook for mortgages is also becoming rosier.

Yahoo Finance's Rebecca Chen explains:

The average rate on the 30-year mortgage dropped to 6.95% from 7.03% the week before, according to Freddie Mac on Thursday. Rates fell for the seventh consecutive week and hit the lowest level since early August when rates were 6.96%.

Thanks to bullish overall inflation data, housing experts are predicting near-future rate cuts that will bring mortgage rates even closer to 6%, helping the slow and expensive US housing market that has sidelined many homeowners and prospective buyers over the last 12 months.

"Given inflation continues to decelerate and the Federal Reserve Board’s current expectations that they will lower the federal funds target rate next year, we likely will see a gradual thawing of the housing market in the new year," Sam Khater, Freddie Mac’s chief economist, said in the press release.

It's a bull market (literally!)

Thu, December 14, 2023 at 12:10 p.m. EST, Alexandra Canal

The bulls have taken over the stock market... and apparently Newark Penn station!

According to the NJ TRANSIT rail service, a bull on the loose seems to have caused delays for commuters — just as the Dow closed at a record high above 37,000 on Wednesday.

Coincidence? You be the judge.

NJ TRANSIT rail service is subject to up to 45 minute delays between Newark Penn and PSNY, due to Police activity near Newark Penn Station. NJ TRANSIT rail tickets and passes are being cross-honored by PATH and Hoboken, Newark Penn and 33rd Street New York.

Police activity: pic.twitter.com/XrtIEK5ZGH

— NJ TRANSIT (@NJTRANSIT) December 14, 2023

Big gains for small caps. Again.

Thu, December 14, 2023 at 11:18 a.m. EST, Myles Udland

Stocks are rallying across the board on Thursday, but the biggest moves continue to come from small caps.

The Russell 2000 (^RUT) was up as much as 2.2% early Thursday after a 3% move higher on Wednesday.

A big part of this rally is due to what we've seen in financials, with banks rallying as lower rates could ease some of the balance sheet pressures that eventually tipped Silicon Valley Bank into bankruptcy earlier this year.

About 16% of the Russell 2000 is made up of financial stocks and tech, the biggest sector weighting in the index, caps out at about 18%.

For the S&P 500, financials are about 12% of the market cap and that group includes non-banks like Berkshire Hathaway. Moreover, tech stocks have about a 30% weighting in the S&P 500.

In other words, when banks are rallying, the Russell is likely to be in rally mode as well, a story playing out in spades in today's market.

The 'lid' is off stocks, and laggards are soaring

Thu, December 14, 2023 at 11:00 a.m. EST, Josh Schafer

The Federal Reserve told investors it now sees more interest rates cuts than previously expected as the US economy has the vaunted soft landing in sight.

And now, a full-on stock market rally has ensued with the Dow Jones Industrial Average (^DJI) soaring to a new record high and the S&P 500 (^GSPC) closing in on its own previous top.

To CFRA's chief investment strategist Sam Stovall, Powell's comments "took the lid off the market's concerns," and now the market "has further to run," he told Yahoo Finance Live.

As Stovall points out, a quick look at the market action on Thursday paints a clear picture for what's benefiting the most from the Fed pivot.

Real Estate (XLRE), one of the worst-performing sectors of the last year, is up nearly 2.5% on Thursday. Big banks are soaring too with Goldman Sachs (GS) touching a 52-week high at the open while Bank of America (BAC) is also up more than 4%.

"Not surprisingly Financials and Real Estate have been on the top because those are the ones that had been pressured the most because of the higher rates," Stovall said.

Economic data shows consumer remains strong

Thu, December 14, 2023 at 10:19 a.m. EST, Josh Schafer

Economic data on Thursday showed the amount of layoffs in the US isn't taking a material step higher while consumers continue to spend money.

Retail sales grew 0.3% in November, according to Census Bureau data. Economists had expected a 0.1% decline.

"The upside surprise in November retail sales is indicative of the continued staying power on the part of consumers," Wells Fargo Economics senior economist Tim Quinlan wrote in a research note on Thursday.

And that staying power comes as the labor market overall remains tight, with unemployment at a historically low level.

New data Thursday showed weekly jobless claims came in lower than expected. In the week ending Dec. 9, 202,000 jobless claims were filed, below economists expectations for 220,000, which would've been roughly in line with the week prior.

"Still-low initial jobless claims suggest substantial and widespread layoffs are still not occurring," Citi's team of economists wrote in a research note on Thursday.

Stocks press higher at the open

Thu, December 14, 2023 at 9:44 a.m. EST, Josh Schafer

The Federal Reserve-driven stock market rally continued on Thursday as investors positioned themselves for the Fed's latest projection that interest rates will fall more than previously expected.

The Dow Jones Industrial Average (^DJI) added about 0.3%, setting the blue-chip index up to build on its record close above 37,000 on Wednesday. The S&P 500 (^GSPC) was up almost 0.6%, while contracts on the tech-heavy Nasdaq Composite (^IXIC) added 0.4%.

Interest rate-sensitive Real Estate led the sectors surging more than 2%, while the Nasdaq 100 paced gains on track for a record close.

Why investors are so jubilant right now

Thu, December 14, 2023 at 7:54 a.m. EST, Karen Friar

Investors are celebrating after the Federal Reserve's policy message turned out more dovish than many expected — and that has put fresh record highs for stocks in sight.

While the central bank's decision to keep interest rates unchanged was no surprise, the signal that three rate cuts are in the cards next year was unexpected.

What's also thrilling investors is that the Fed expects a "soft landing" for the US economy — given central banks usually ease up on policy in response to a downturn, notes Yahoo Finance's Myles Udland.

The Fed's forecasts paint a picture of cooling inflation, muted unemployment, and a moderation in economic growth. Read here for more on what that means for the market.

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