Stocks Hit Fresh Records Ahead of Independence Day

Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange (NYSE) in New York on December 27, 2018. (Drew Angerer/Getty Images)

U.S. stocks rose on July 3, with each of the major indexes notching record highs amid increasing expectation for a rate cut by the Federal Reserve.

In a shortened Wall Street session ahead of the July 4th holiday, the Dow Jones Industrial Average climbed more than 170 points closing at 26,966, an all-time high.

The S&P 500 also registered a new all-time high, gaining nearly 0.8 percent to 2,995.8 and the Nasdaq Composite surged 0.75 percent to 8,170.2.

Stocks rallied at the start of the week as easing trade tensions with China lifted investor sentiment. Hopes for interest rate cuts by the central bank were also credited for this week’s rally.

Traders are now pricing in a 100 percent chance of a rate cut by the end of this month, according to the CME FedWatch tool. Nearly 70 percent of traders expect the Fed to lower the rate by 25 basis points in July and the remaining 30 percent expect 50 basis points cut.

The president has long been critical of the Fed, calling it the biggest problem for the nation’s economy. He began openly criticizing the central bank and its Chairman Jerome Powell last year.

The Fed raised rates eight times during the Trump administration, with the last hike triggering a stock market nosedive in December 2018. The central bank has held steady since then as Trump continues to demand a rate cut, which the Fed is now contemplating.

Wall Street analysts expect the rally to continue this year.

“After record close, industry analysts still predict an 8 percent increase in value for the S&P 500” over the next 12 months, data provider FactSet stated in a report on July 3.

And at the sector level, the energy sector is expected to see the biggest rally, with nearly 20 percent increase in value, according to FactSet.

Ivan Pentchoukov contributed to this report.