S&P 500 rallies on Fed minutes

The S&P 500 surged on Wednesday, fuelled by optimism that the Federal Reserve will lower interest rates at its upcoming meeting.

The index gained 0.42 per cent to close at 5,620.85, marking its ninth increase in ten sessions and nearing its all-time high. The Nasdaq Composite also climbed, adding 0.57 per cent to reach 17,918.99, securing its ninth consecutive gain. The Dow Jones Industrial Average inched up 0.14 per cent to 40,890.49, extending its winning streak to six out of seven trading days.

The Russell 2000 outperformed the broader market, with the small-cap index jumping over 1 per cent.

Four of the S&P 500’s 11 sectors reached new 52-week highs during the day. Consumer Discretionary was the best performer, closely followed by Materials. Energy and Financials were the only two sectors that closed lower.

The market's positive momentum followed the release of the Fed's July meeting minutes, which hinted at a potential rate cut in September if economic data aligns with expectations.

Traders are now pricing in a 100 per cent probability of a rate cut next month, according to the CME Group's FedWatch tool. However, the size of the cut remains a topic of debate.

Investors are looking ahead to Fed Chair Jerome Powell's speech at the Jackson Hole Economic Symposium on Friday, where he may provide further clarity on the Fed's next move.

In corporate news, Target shares surged over 11 per cent after reporting stronger-than-expected second-quarter earnings. Conversely, Macy's shares plummeted nearly 13 per cent following a lowered full-year sales forecast.

Bank stocks mostly underperformed Wednesday. Shares of Citigroup and Wells Fargo were down 1.3 per cent and 1.2 per cent, respectively. Goldman Sachs and Morgan Stanley slid 0.1 per cent each. JPMorgan Chase and Bank of America bucked the trend, closing higher by 0.1 per cent and 0.2 per cent respectively.

Coal mining has emerged as a major winner in the post-pandemic era, but two U.S. coal companies are preparing for the inevitable downturn. On Wednesday, Arch Resources and Consol Energy announced plans to merge in an all-share transaction. The newly formed company, to be named Core Natural Resources, will have an equity value of $5.2 billion, with just over half of the shares allocated to Consol's shareholders.

Futures

The SPI futures are pointing to a 0.4 per cent rise.

Currency

One Australian dollar at 7.25am was buying 67.43 US cents.

Commodities

Gold has lost 0.12 per cent. Silver has added 0.06 per cent. Copper has gained 0.61 per cent.

Figures around the globe

European markets closed higher. London’s FTSE added 0.12 per cent, Frankfurt gained 0.50 per cent, and Paris closed 0.52 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei lost 0.29 per cent, Hong Kong’s Hang Seng fell 0.69 per cent, while China’s Shanghai Composite closed 0.35 per cent lower.

Yesterday, the Australian share market closed 0.16 per cent higher at 810.50.

Ex-dividends
Domain Holdings Aus (ASX:DHG) is paying 4 cents fully franked
GWA Group Ltd (ASX:GWA) is paying 8 cents fully franked
JB Hi-Fi Limited (ASX:JBH) is paying 183 cents fully franked
Microequities (ASX:MAM) is paying 1.8 cents fully franked
MyState Limited (ASX:MYS) is paying 11.5 cents fully franked
Suncorp Group Ltd (ASX:SUN) is paying 44 cents fully franked

Dividends payable

Mayfield Group Holdings Ltd (ASX:MYG)
Centuria Capital Group (ASX:CNI)
Dexus Industria REIT (ASX:DXI)
Dexus Convenience Retail REIT (ASX:DXC)
HomeCo Daily Needs REIT (ASX:HDN)
HealthCo Healthcare and Wellness REIT (ASX:HCW)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap, Marketech.

Disclaimer

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