US stocks edged higher on Thursday, extending the rally seen after a Federal Reserve policy move on Wednesday and putting the S&P 500 index in a record close range.

Investors, meanwhile, were digesting a slew of US economic data amid monetary policy measures by the Federal Reserve on Wednesday and the Bank of England and European Central Bank on Thursday.

What is happening
  • The Dow Jones Industrial Average DJIA,
    + 0.60%
    162 points, or 0.5%, to 36,084.

  • The S&P 500 SPX,
    + 0.27%
    added 0.4%, or about 17 points, to 4,727, above the record closing level of 4,712.02 set on Dec. 10.

  • The Nasdaq COMP Composite Index,
    gained 0.3%, or 45 points, to 15,609.

On Wednesday, the Dow Jones rose 383 points, or 1.08%, to 35,927, the S&P 500 rose 76 points, or 1.63%, to 4,710, and the Nasdaq Composite gained 328 points, or 2, 15%, at 15566.

What drives the markets

Central banks remained in the frame on Wall Street, a day after the Federal Reserve took a hawkish stance in its forecast for interest rate hikes in 2022 and 2023 while more aggressively slowing the pace of its purchases. of bonds.

The Bank of England made a surprising move for the second month in a row on Thursday, opting for a hike in interest rates, and in an 8-1 vote, raised its benchmark rate to 0.25% from 0.10%. UK government concerns over the economic impact of the omicron variant of the coronavirus, along with speeches from central bank policymakers ahead of time, had led traders to expect the BOE to refrain from increase its rates in December.

Meanwhile, the European Central Bank, also on Thursday, said it will further slow down asset purchases under its Pandemic Emergency Purchase Program, or PEPP, in the first quarter of the year. next year and would stop them in March. But the ECB left interest rates unchanged.

“The Governing Council considers that the progress of the economic recovery and towards its medium-term inflation target will allow a gradual reduction in the pace of its asset purchases over the coming quarters. But monetary accommodation is still necessary for inflation to stabilize at the 2% inflation target in the medium term, ”the ECB said in a statement.

“Based on asset price movements during and after the meeting, the fear before the FOMC meeting was probably even more exaggerated than we thought,” said Steve Englander, head of G10 global currency research. and macro strategy for North America at Standard Chartered.

“The initial market reaction doesn’t always stick, but we think the Fed and investors are confident that the Fed is aware of and responding to inflation risks, while taking a measured and data-dependent approach to responding,” Englander said.

Mike Kramer of Mott Capital Management attributed the rise in stock markets to the decline in volatility. “The rally in stocks was driven purely by the decline in the VIX VIX,
+ 0.47%,
as the levels of implied volatility fall. We see that a lot these days, ”he said.

Beyond the news from the central bank, new claims for unemployment benefits in the United States rose by 18,000 in mid-December to 206,000, but the level remains relatively low after last week, when the requests fell to their lowest level since 1969.

In addition, the seasonally adjusted annual rate of housing starts hit about 1.68 million in November, marking its highest level since March, according to data from the Census Bureau and the Department of Housing and Urban Development. Consensus estimates gathered by FactSet had anticipated a rate of 1.57 million.

Which companies were the center of attention?
  • Lennar LEN reported an increase in profits on Wednesday evening that exceeded analysts’ expectations, news that could put a recent rally in homebuilders at risk.
  • Rubicon, a cloud-based waste and recycling platform operator, goes public by merging with a specialist acquisition company Founder SPAC FOUN, in an agreement with an implied pro forma enterprise value of $ 1.7 billion.
  • Delta Air Lines Inc. DAL stock rose 2.1% on Thursday ahead of the market after setting its financial targets for the coming years ahead of its scheduled capital markets day.
  • Actions of Biogen Inc. BIIB was the center of attention after the company announced its intention to submit a protocol for a Phase 4 confirmatory study for its Alzheimer’s disease drug to US regulators in March.

  • Original parts company GPC announced Thursday that its Motion Industries Inc. unit will contribute approximately $ 1.3 billion to Kaman Distribution Group, a 1,700-employee power transmission, automation and hydraulic power distributor founded in 1971.
  • Emergent BioSolutions Inc. EBS announced Thursday that it has started assaying participants in a Phase 1 clinical trial for its universal influenza vaccine candidate.
How are the other assets doing?
  • The yield on the 10-year TMUBMUSD10Y T-bill edged up less than a basis point to 1.47%. Treasury yields and prices move in opposite directions.

  • The ICE US Dollar Index DXY, a measure of the currency against half a dozen other currency units, fell 0.5% after the moves by the European Central Bank.

  • In oil futures, West Texas Intermediate CL00 crude, for January delivery CLF23, rose 0.6% to trade at $ 71.28 per barrel.

  • GC00 gold futures for February delivery GCG22 rose 1.4% to trade at around $ 1,790 an ounce as the dollar collapsed.

  • The Stoxx Europe 600 SXXP index traded up 1.4%, while the London UKX FTSE 100 index rose 0.9%.

  • In Asia, the Shanghai SHCOMP Composite Index closed 0.8% higher, while the Hang Seng HSI Index rose 0.2% in Hong Kong. China’s CSI 300,000,300 added 0.5%. Japan’s Nikkei 225 NIK index rose 2.1%.