Wall Street and global stock markets surged to new highs on Thursday, spurred by the Federal Reserve’s interest rate cut announced the previous day and a remarkable 23% jump in Intel shares. However, contrary to the easing monetary policy, both the dollar and Treasury yields increased.
On this trading day, Japan’s Nikkei index hit a record high, while European markets, particularly technology stocks, saw a notable rise of 4%, marking their best performance since April. In the U.S., small-cap stocks also experienced an impressive rally, with the Russell 2000 index gaining 2.5%. In currency markets, the dollar appreciated against almost all major and emerging market currencies, surging 1.4% against the New Zealand dollar following disappointing GDP data from New Zealand. The Argentine peso also fell dramatically to a record low in the parallel market. Meanwhile, in the bond market, Treasury yields climbed, driven by rising U.S. jobless claims, with long-end yields increasing by as much as 5 basis points.
A key highlight of the day was Intel’s turnaround, driven by significant investments from both the U.S. government and Nvidia, which has taken a 4% stake in the chipmaker following a deal for the federal government to acquire a 10% stake. This sudden turnaround raised discussions about corporate governance, national security, and the ongoing U.S.-China tech rivalry.
Central bank activities were under focus, particularly the Fed’s first rate cut in nine months. Despite the positive movement in markets, the Fed’s messaging appeared inconsistent. While the Fed lowered its unemployment rate projections for 2026 and 2027, it also anticipated three quarter-percentage-point rate cuts this year. This contradiction sparked confusion among analysts and investors.
Fed Chair Jerome Powell remarked on the increasing risks to employment that warranted the rate cut, yet the bank’s optimistic GDP growth and inflation forecasts contradicted the urgent need for monetary easing. As Ron Temple of Lazard pointed out, the variations in outlook among Federal Open Market Committee members were striking, leading to a scenario of uncertainty regarding future policies.
In addition to the U.S. monetary policy developments, attention turned to an upcoming call between President Donald Trump and Chinese President Xi Jinping. Their discussion is expected to center on critical trade and tech issues, with signs of potential breakthroughs on matters such as TikTok and China’s Huawei expressing ambitions in chip and computing technology.
As the global economic landscape continues to shift, investors brace themselves for several key data releases and central bank decisions in the upcoming days, particularly focusing on Japan’s interest rate decision and inflation metrics, alongside significant retail sales data from the UK. The current market dynamics and the challenges faced by central banking authorities highlight an environment filled with both opportunity and risk, making future movements in markets difficult to predict.
