All three major U.S. equity benchmarks—the S&P 500, Nasdaq 100, and Dow Jones—experienced significant gains on Thursday, reaching new record highs as investor sentiment turned bullish amid growing expectations of forthcoming interest rate cuts. This optimistic trend emerged despite recent economic indicators showing troubling signs, including a year-over-year inflation rate increase to 2.9% in August and a spike in weekly jobless claims to 263,000, the highest figure since October 2021.
Investors appeared unfazed by potential stagflation risks, focusing instead on signals that the Federal Reserve might prioritize stabilizing the labor market over controlling inflationary pressures. By midday in New York, the S&P 500 rose by 0.8% to 6,584 points, while the Nasdaq 100 surged 0.7%, surpassing the 24,000 threshold. The Dow Jones Industrial Average recorded a notable climb of 1.3%, reaching 46,080.
Market speculation suggests a clear expectation of a 25-basis-point rate reduction in the upcoming week, with over a 90% likelihood of an additional cut in October, according to the CME FedWatch tool. Further projections from the CFTC-regulated betting platform Kalshi indicated a 63% probability of another rate reduction by December 2025.
Every sector within the S&P 500 saw upward movement, with cyclical groups such as consumer discretionary, materials, and financials leading the charge. The anticipation of lower interest rates also impacted the bond market, driving Treasury yields to their lowest levels in five months; the 10-year benchmark yield dipped to 4%, a level not seen since early April.
The heightened risk appetite briefly interrupted gold’s upward trajectory, causing the precious metal to decline by 0.2% to $3,630. However, silver prices saw a gain of 1.4%, climbing to $41.70 an ounce. Meanwhile, crude oil prices fell by 2%, and Bitcoin experienced a slight increase of 0.3%, reaching $114,000.
In terms of major indices, the following price changes were noted: the Russell 2000 rose 1.5% to 2,412.60; the Dow Jones increased 1.3% to 46,087.94; the S&P 500 advanced 0.8% to 6,585.53; and the Nasdaq 100 gained 0.7% to 24,012.41 by 12:05 p.m. ET.
Among notable ETFs, the Vanguard S&P 500 ETF soared 0.8% to $604.49, while the SPDR Dow Jones Industrial Average rose 1.2% to $461.58. The tech-heavy Invesco QQQ Trust increased by 0.7% to $584.72, and the iShares Russell 2000 ETF rose 1.5% to $239.94. The Consumer Discretionary Select Sector SPDR Fund outperformed the market with a 1.3% gain, while the Energy Select Sector SPDR Fund lagged with only a 0.1% increase.
In individual stock performances, Synopsys, Inc. led the gainers with an 11.11% rise, followed closely by Centene Corporation at 10.66%. Micron Technology saw a 9.57% increase, and Warner Bros. Discovery and Lam Research Corporation gained 7.30% and 7.28%, respectively. On the downside, Delta Air Lines experienced a 4.30% decline, followed by Oracle Corporation and Netflix, which dropped 3.38% and 2.83%, respectively. Advanced Micro Devices saw a slight decrease of 2.21%.
