Stock indexes hit record highs as Micron rallies; oil prices fall

By Caroline Valetkevitch

NEW YORK (Reuters) - Global stock indexes reached record highs on Thursday after chipmaker Micron Technology (NASDAQ:MU )'s upbeat forecast, while oil dropped on a media report that Saudi Arabia plans to dump its unofficial crude price target of $100 a barrel.

Silver rose to its highest level in nearly 12 years, with interest rate cuts by major central banks lifting investment interest in precious metals.

The S&P 500 registered an all-time closing high, as did the pan-European STOXX 600 index. MSCI's global stock index hit an intraday record.

Micron's forecast late on Wednesday bolstered optimism about demand for chips used for artificial intelligence computing. Micron's shares rose 14.7% on Thursday, while an index of semiconductors was up 3.5%.

U.S. Treasury yields edged higher after strong data, including an unexpected drop in weekly U.S. jobless claims, led traders to cut bets that the Federal Reserve will make another 50-basis point cut at its November meeting.

Last week's rate cut by the U.S. central bank was its first reduction in borrowing costs since 2020.

"There's a lot of focus on the labor market in terms of what the Fed is going to do next," said Zachary Griffiths, senior investment grade strategist at CreditSights.

Other U.S. reports showed corporate profits increased at a more robust pace than initially thought in the second quarter, while gross domestic product grew at an unrevised 3%.

Investors anxiously await Friday's release of the core personal consumption expenditures (PCE) price index - the Fed's preferred measure of inflation.

The Dow Jones Industrial Average rose 260.36 points, or 0.62%, to 42,175.11, the S&P 500 increased 23.11 points, or 0.40%, to 5,745.37 and the Nasdaq Composite was 108.09 points, or 0.60%, higher at 18,190.29.

European shares followed China's market higher. The pan-European STOXX 600 index closed 1.3% higher at 525.61 points, an all-time closing high. MSCI's gauge of stocks across the globe rose 7.08 points, or 0.84%, to 850.69 and hit a record during trading.

In Europe, China-exposed stocks such as luxury goods companies and miners outperformed.

An official readout from a meeting of China's politburo said Beijing would deploy "necessary fiscal spending" to meet this year's economic growth target of roughly 5%, acknowledging new problems and raising market expectations for fresh stimulus on top of measures announced this week.

Reuters reported separately that China plans to issue special sovereign bonds worth about 2 trillion yuan ($284 billion) this year, primarily to stimulate consumption.

In commodities, spot silver was up 0.6% at $32.03 per ounce as of Thursday afternoon, having hit its highest since December 2012 at $32.71. Spot gold was up 0.5% at $2,670.52 per ounce, having hit a record high of $2,685.42 earlier in the day.

U.S. crude fell $2.02 to settle at $67.67 a barrel and Brent dropped $1.86 to settle at $71.60.

Saudi Arabia is preparing to abandon its unofficial price target of $100 a barrel for crude as it gets ready to increase output, the Financial Times reported on Thursday, citing people familiar with the matter.

In Treasuries, benchmark 10-year yields rose 0.8 basis points to 3.789% and earlier reached 3.821%, the highest since Sept. 4.

Traders are now pricing in a 51% probability that the Fed will cut rates by 50 basis points at the conclusion of its Nov. 6-7 meeting, down from 63% before the most recent data, according to the CME Group's (NASDAQ:CME ) FedWatch Tool.

The dollar eased after the U.S. data indicated a relatively healthy economy, while the Swiss franc rose after the country's central bank cut rates. 

The Swiss National Bank cut rates by 25 basis points on Thursday, choosing not to go for a larger 50-bp move that markets had seen as a possibility. It was the SNB's third such move this year.

Against the Swiss franc, the dollar weakened 0.52% to 0.846.



Elsewhere, policy doves at the European Central Bank are preparing to fight for an interest rate cut next month after a string of weaker-than-expected economic data, a move likely to meet resistance from their more conservative peers, seven sources told Reuters.

The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.42% to 100.52, on track for its sixth drop in seven sessions, after rising as high as 100.95 earlier in the day. The euro was up 0.41% at $1.1178.

Source: Investing.com