Wall Street surged toward new record highs on Thursday, as the S&P 500 briefly topped its February 19 closing high of 6,144.15, extending a nearly $10 trillion rally from the brink of a bear market.
It seems like the investors have brushed aside lingering geopolitical concerns and pinned their hopes on the Federal Reserve resuming rate cuts.
The index gained nearly 1%, powered by tech giants and a rally in bank stocks after a veteran analyst declared it’s “game on” as long as the economy avoids a recession.
At the closing bell, the Dow Jones Industrial Average was trading 0.94% higher at 43,386.84, while the S&P closed very close to its all-time high of 6,141.02, 0.80% up.
The NASDAQ Composite index surged 194.36 points (+0.97%) on Thursday and closed at 20,167.91.
Meanwhile, market jitters eased sharply, and the VIX, Wall Street’s so-called fear gauge, plunged to 16 after peaking above 52 during April’s tariff-driven turbulence.
US labor market softening
The fresh upside in stock markets came despite the Labor Department’s weekly jobless claims report which offered the latest snapshot of the economy.
The report revealed that the number of people receiving state unemployment benefits in mid-June climbed to its highest point in three and a half years.
While overall layoffs are still low by historical standards, hiring has slowed noticeably.
Economists point to President Donald Trump’s sweeping import tariffs as a key factor, saying the trade uncertainty is making it harder for businesses to map out future plans and staffing needs.
Dollar in a free fall
Not everything seems to be hunky-dory as the dollar is reeling again, hitting its lowest level in more than three years as investors react to growing concerns over the Fed’s independence.
The latest blow came after President Donald Trump lashed out at Federal Reserve Chair Jerome Powell on Wednesday, calling him “terrible” and hinting that he’s already considering three or four potential replacements for the top job.
The market didn’t take long to respond. With trust in the central bank’s autonomy rattled, traders dumped the greenback, fueling its ongoing slide.
The dollar slipped back to multi-year lows against a group of major currencies on Thursday, wiping out gains it had briefly made earlier in the week when Middle East tensions sparked a flight to safety.
Having already dropped 10% this year, the greenback is on track for its steepest annual decline since 2003.
With a key July 9 trade deadline approaching, many see more weakness ahead for the currency.
What analysts say?
As tech giants continue to drive US indexes closer to record territory, some technical analysts are warning that a broader rally is needed to sustain the momentum.
Without more sectors stepping in, they say a pullback could be on the horizon in the coming months.
Unlike the headline S&P 500, its equal-weighted counterpart, which many consider a clearer gauge of overall market strength remains roughly 4% below its peak from last November.
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