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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

(Updates prices at 4.20 pm ET)

By Isla Binnie

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

broke record highs after global counterparts booked gains and

Treasury yields rose on Thursday as the start of the Federal

Reserve's first 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 gained, with Tesla,

and Meta posting solid gains. The tech-heavy Nasdaq

Composite climbed 2.51% to 18,013.98 points.

The blue-chip Dow Jones Industrial average rose 1.26% to

42,025.19 points, while the benchmark S&P 500 advanced

1.70% to end the session at 5,713.64 points. Both were

record-high closing levels.

Smaller listed companies, which might be expected to enjoy

reduced operating costs and cheaper debt in a lower rates

environment, also felt the benefit.

The Russell 2000 small-cap index rose 2.1%.

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

world stocks index gained 1.66%, to 839.98.

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 3.2

basis points to 3.719%, from 3.687% late on Wednesday.

Shorter-dated debt yields felt pressure after a separate

data release showed existing home sales fell to their lowest

level since 2023. The 2-year note yield, fell 1.5

basis points to 3.5876%, from 3.603% late on Wednesday.

CURRENCIES, COMMODITIES

In currency markets, the dollar wilted in choppy trading.

The dollar index, which measures the greenback against a

basket of currencies including the yen and the euro, fell 0.41%

to 100.61.

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 0.5% to $1.3278.

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 0.21% against the greenback

to 142.57 per dollar.

Gold rose 1.15% to $2,588.34 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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