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Intel up on $3.2 bln grant from Israel
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S&P 500 touches highest intraday level since Jan 2022
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Manchester United rises as Jim Ratcliffe takes 25% stake
NEW YORK, Dec 26 (Reuters) -
U.S. stocks extended their rally on Tuesday, kicking off the final week of 2023 with expectations that the Federal Reserve will begin cutting interest rates as soon as March.
All three major U.S. stock indexes rose in light trading, with the S&P 500 touching its highest intraday level since January 2022. All three are on track for monthly, quarterly and annual gains.
Interest rate sensitive megacap stocks and chip shares led the upward momentum.
On Friday, the three indexes notched their eighth straight weekly gains - their longest weekly winning streaks in years - as economic data indicated inflation is easing down closer to the Fed's average annual 2% target.
"It's going to be a fairly quiet trading session. The momentum stays towards the upside, but I don't think we're going to see any strong volume that would suggest we could be in for a strong rally," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"We had a good inflation number on Friday. If inflation continues to move down in January and February, there's a good chance that the Fed may cut (rates) earlier than anticipated."
The S&P 500 is on track to post its biggest quarterly gain in three years, and is within 1% of its all-time closing high reached in January 2022.
Closing above that level - 4,796.56 - would confirm the benchmark index has been in a bull market since touching the bear market nadir, the closing low reached in October 2022.
Stocks' eight-week rally shifted into overdrive two weeks ago after the Fed signaled the end of its rate hike cycle and opened the door to potential rate cuts in 2024.
At last glance, markets had baked in a 72.7% likelihood of a 25 basis point reduction in the Fed funds target rate as soon as March, according to CME's FedWatch tool.
According to preliminary data, the S&P 500 gained 20.31 points, or 0.43%, to end at 4,774.94 points, while the Nasdaq Composite gained 81.97 points, or 0.55%, to 15,074.95. The Dow Jones Industrial Average rose 160.69 points, or 0.43%, to 37,546.66.
Energy shares enjoyed the heftiest percentage gain, boosted by surging crude prices as Middle East strife ratcheted up supply concerns, while optimism over Fed rate cuts fueled demand hopes.
Shares of Manchester United rose after billionaire Jim Ratcliffe struck a long-awaited deal to buy a 25% stake in the soccer club at $33 per share.
Gracell Biotechnologies surged after AstraZeneca said it will buy the China-based firm for up to $1.2 billion.
Intel Corp advanced following the Israeli government's agreement to endow a $3.2 billion grant for a $25 billion plant the chipmaker plans to build in southern Israel. (Reporting by Stephen Culp; Additional reporting by Shubham Batra and Amruta Khandekar in Bengaluru; Editing by Richard Chang)
