U.S. stocks rally amid rate cut expectations

Stocks closed higher, led by gains in the tech sector that rose nearly 1.5%

U.S. stocks rallied for a fourth straight day on Wednesday as expectations for a central bank rate cut remained elevated.

Stocks closed higher, led by gains in the tech sector that rose nearly 1.5%, in part due to a jump of around 7% in Dell Technologies after its quarterly results and outlook.

Equities have rallied since Friday, when expectations for a December rate cut from the U.S. central bank rose after New York Fed President John Williams said interest rates can fall in the near term even as other policymakers insisted borrowing costs should remain steady for now.

Those expectations were buttressed by comments this week from San Francisco Federal Reserve Bank President Mary Daly and Fed Governor Christopher Waller in support of a December cut.

We’ve seen some dovish comments from the Fed, particularly the New York Fed which I think are signaling a potential cut next month, and I think that that’s what’s been driving the markets lately, said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts.

Economic data on Wednesday showed weekly initial jobless claims dropped 6,000 to a seasonally adjusted 216,000 for the week ended November 22, the lowest level since April.

The Dow Jones Industrial Average gained 314.67 points, or 0.67%, to 47,427.12, the S&P 500 added 46.73 points, or 0.69%, to 6,812.61 and the Nasdaq Composite jumped 189.10 points, or 0.82%, to 23,214.69.

Expectations for a 25 basis point cut from the central bank held at more than 80%, according to CME’s FedWatch Tool, well above the 30.1% from a week ago.

MSCI’s gauge of stocks across the globe climbed 9.31 points, or 0.94%, to 1,000.37, and was on pace for its fourth straight session of gains, its longest streak in a month. The MSCI index has added 3.3% over the four-day rally, its biggest four-day percentage gain since mid-May.