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World stocks push higher after bumper Fed cut

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Fed move seems to point to soft landing

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Risk appetite weighs on Treasury bonds

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Graphic: World FX rates http://tmsnrt.rs/2egbfVh

By Isla Binnie

NEW YORK, Sept 19 (Reuters) - Wall Street indexes

marched past previous record highs after global counterparts

booked gains and longer-dated Treasury yields rose on Thursday

as the start of the Federal Reserve's first interest rate

cutting cycle in more than four years whet investors' risk

appetite.

With a larger-than-usual move on Wednesday, the U.S. central

bank turned the page on more than a year in which borrowing

costs were kept at their highest for decades to try to temper

inflation.

Fed Chair Jerome Powell said he did not see elevated risks

of a slowdown, and policymakers projected the benchmark rate

would fall again, reflected in a closely-watched tool known as a

dot plot.

"The jumbo cut appears to have raised the perceived

likelihood of a soft landing," said Jonathan Cohn, Head of U.S.

Rates Desk Strategy at Nomura, referring to economists' ideal

scenario where inflation cools without triggering a recession.

This was "supporting a sharp rally in risk assets, even as

Powell's rhetoric and the dot plot pushed back on the prospect

of additional 50bp cuts," Cohn said adding: "the market will

continue to acclimate to the Fed's mixed messaging through

tomorrow's light calendar."

Megacap tech stocks including Microsoft ( MSFT ) and Apple ( AAPL )

gained on Wall Street. Smaller companies, which might

be expected to enjoy reduced operating costs and cheaper debt in

a lower rates environment, also felt the benefit.

The tech-heavy Nasdaq Composite climbed 2.78%, to

18,061.59.

The blue-chip Dow Jones Industrial average rose 1.38%, to

42,076.78 and the benchmark S&P 500 rose 1.89%, to

5,724.42. Both hit intraday record highs.

The Russell 2000 small-cap index rose as much as 2%.

Gains were not limited to Wall Street. MSCI's 47-country

world stocks index gained 1.78%, to 840.96.

Jobless claims for the week ended Sept. 14 came in lower

than the market expected, with data showing the number of

Americans filing new applications for unemployment benefits

dropped to a four-month low.

This contributed to a sell-off in U.S. government debt that

pushed up yields.

The benchmark 10-year Treasury yield hit its

highest level in about two weeks at 3.768% and was last up

3.738%, from 3.687% late on Wednesday.

Shorter-dated debt yields felt pressure after another data

report showed existing home sales fell to their lowest level

since 2023. The 2-year note yield, fell 0.3 basis

points to 3.6002%, from 3.603% late on Wednesday.

CURRENCIES, COMMODITIES

In currency markets, the dollar edged lower in choppy

trading. The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

fell 0.43% to 100.59.

The Bank of England's decision to leave interest rates

unchanged did not dampen market spirits in Europe, with the

STOXX 600 index last up more than 1%. Sterling

strengthened 0.57% to $1.3285.

The bonanza week for interest rate decisions continues on

Friday with the Bank of Japan. It is not expected to make a move

now, but may buck the global trend and line up another rate hike

for as soon as October.

The Japanese yen weakened 0.24% against the greenback

to 142.63 per dollar in afternoon trading.

Gold rose 1.14% to $2,588.06 an ounce.

Oil prices rose, backed by the view that lower rates equal

stronger demand.

Benchmark Brent crude futures climbed back above $74

a barrel for the first time in more than a week, and settled at

$74.88, 1.67% higher on the day. U.S. crude settled 1.47%

higher, at $71.95 a barrel.

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