NEW YORK, June 20 — The S&P 500 index was set to open at a record high today, after the Federal Reserve reassured investors that it was ready to cut interest rates as soon as next month to counter growing risks to global and domestic growth.
The central bank left rates unchanged at the end of its two-day June policy meeting yesterday, but pledged to “act as appropriate” to sustain economic health.
The S&P and the Dow Jones Industrial Average have gained in recent weeks on hopes of a rate cut, moving within striking distance of record closes set in late April.
“Chairman Jerome Powell’s comments that ‘the case for additional accommodation has strengthened’ was exactly what market participants wanted to hear,” said Robert Johnson, chief executive officer at Economic Index Associates in New York.
“A continued trade war with China could be the catalyst that sends the US economy into recession and rates cuts can be viewed as pre-emptive strikes by the Fed to prevent that from happening.”
At 8.52am. ET, Dow e-minis were up 240 points, or 0.9 per cent. S&P 500 e-minis were up 28.75 points, or 0.98 per cent and Nasdaq 100 e-minis were up 107.5 points, or 1.4 per cent.
Buoying sentiment was data which showed the number of Americans filing applications for unemployment benefits fell more than expected last week, pointing to underlying labour market strength despite a sharp slowdown in job growth in May.
US treasury bond yields tumbled and the dollar was on track for its biggest two-day drop this year on the more-than-expected dovish Fed.
Top Chinese and US officials will resume trade talks in accordance with the wishes of their leaders, but China hopes the United States will create the necessary conditions for dialogue, the Chinese commerce ministry said today.
Among stocks, Apple Inc rose 1.5 per cent in premarket trading after Evercore ISI raised its price target on the iPhone maker, saying investors are under appreciating a large growth opportunity.
Boeing Co gained 1 per cent after the planemaker said it is in talks with other airlines for sales of its 737 MAX after receiving a letter of intent for 200 of the grounded planes from British Airways owner IAG.
Oracle Corp jumped 6.6 per cent after the business software maker forecast current-quarter profit above estimates as it benefited from demand for its on-premise IT, cloud services and license support businesses.
Cruise operator Carnival Corp slid 8.9 per cent after cutting its profit forecast for the year on the Trump administration’s sudden ban on cruises to Cuba and expected lower ticket prices in the coming months.
Rivals Royal Caribbean Cruises Ltd and Norwegian Cruise Line Holdings Ltd also fell. — AFP