US stocks rise as CME trading resumes, Fed rate-cut expectations hold

US stocks rose Friday for a fifth-straight session as the Chicago Mercantile Exchange restarted operations following an earlier outage and traders held firm to expectations for a Federal Reserve interest-rate cut next month. 

The S&P 500 Index climbed 0.2 per cent at 7:12 a.m. in New York, building toward its biggest weekly advance since June. The tech-heavy Nasdaq 100 Index gained 0.3 per cent. The Cboe Volatility Index hovered at around 17. 

The Chicago Mercantile Exchange began restoring most trading operations after an hours-long technical outage that crippled key parts of financial markets. The exchange’s Globex Futures & Options market opened at 8:30 a.m. New York time, while CME Direct was still unavailable. 

“The stock market is always quiet and illiquid on the day after Thanksgiving,” said Miller Tabak & Co.’s Matt Maley. “With the issues the CME is dealing with, investor will be even more likely to sit on their hands today. So, it will be difficult to draw any conclusions from today’s action.” 

Rate Cut Bets 

Most US markets are starting to reopen for a shortened trading session following the Thanksgiving holiday. There is limited news expected Friday, with no economic data scheduled for release and no planned speakers from the Fed ahead of the blackout period leading up to December’s interest-rate decision. 

Markets are continuing to bet that the central bank will cut its benchmark next month. Swaps data shows traders have priced in almost a full quarter-point reduction since last week, when New York Fed President John Williams said he saw room to lower rates again in the near-term amid labor-market softness. 

Markets seem to be driven mostly by changes in monetary-policy expectations, according to Annex Wealth Management’s Brian Jacobsen. 

“Would a 0.25 percentage point reduction in the federal funds rate make a significant difference? Not by itself, but it carries important signaling value,” Jacobsen said. “A cut could indicate not only that the Fed recognizes signs of a softening labor market, but — more importantly — that it is prepared to act in response.” 

Economic data releases — both delayed and fresh — have helped traders get a better understanding on the strength of the consumer and the labor market. However Miller Tabak’s Maley says investors are likely to want more information before locking in their views. 

They “will likely want to get a better idea of how Black Friday does before they act on anything they learn about the consumer too quickly,” Maley said. 

Among individual stocks, CNH Industrial NV fell after JPMorgan downgraded the agricultural equipment maker to underweight from neutral, citing Deere Co.’s industry outlook. Tilray Brands Inc. slumped after announcing a one-for-10 reverse stock split of its common stock.