U.S. stocks closed higher on Thursday following a quarter-point interest rate cut by the Federal Reserve, which has signaled more rate reductions on the horizon. This announcement has fueled optimism among investors regarding potential support for economic recovery. All three major indexes finished the day in positive territory.
The Dow Jones Industrial Average saw a gain of 0.3%, climbing 124.10 points to end at 46,142.42 points. The S&P 500 increased by 0.5%, or 31.61 points, finishing at 6,631.96 points, with technology and industrial stocks leading the charge. The Technology Select Sector SPDR rose by 1.7%, while the Industrials Select Sector SPDR increased by 1.1%. Overall, seven of the eleven sectors within the benchmark index ended positively.
The Nasdaq composite also made notable gains, climbing 0.9% or 209.40 points to close at 22,470.73. The CBOE Volatility Index, often referred to as the market’s fear gauge, dipped slightly by 0.13%, settling at 15.70. In terms of market breadth, advancers outpaced decliners on the New York Stock Exchange, with a ratio of 1.87-to-1, and a more robust 2.5-to-1 ratio favoring advancing issues on the Nasdaq. Overall trading volume reached 19.30 billion shares, exceeding the 20-session average of 16.67 billion.
Investors appeared rejuvenated on Thursday, spurred by the Federal Reserve’s promises for future rate cuts following a volatile session the previous day. Notably, all three major indexes achieved new all-time intraday highs, with small-cap stocks experiencing particularly strong performance. The Russell 2000 small-cap index surged by 2.4%, as these companies are poised to benefit from interest rate cuts due to their reliance on external funding.
Federal Reserve Chairman Jerome Powell explained that the rate cut was a response to worsening labor market conditions and rising employment risks. Despite expressing caution about managing inflationary pressures, he indicated that more rate cuts could occur later in the year—a statement that resonated positively with investors and triggered a rally.
Thursday’s market surge was predominantly driven by technology stocks. Intel Corporation had an exceptional day, with its shares soaring 22.8%, marking its largest one-day gain since October 1987. This surge came in the wake of NVIDIA Corporation’s announcement to invest $5 billion in Intel for collaborative purposes concerning data center and PC chips. NVIDIA’s stock also rose, closing 3.5% higher.
On the economic data front, the Labor Department reported a decline in jobless claims, totaling 231,000 for the week ending September 13, which is down 33,000 from the previous week. The four-week moving average dipped to 240,000, representing a decrease of 750 claims from the prior week’s revised figure. Continuing claims fell to 1,920,000, reflecting a decrease of 7,000, with the four-week moving average dropping to 1,932,500.
Overall, Thursday’s results illustrate a market that is responding positively to the Fed’s monetary policy adjustments and the economic indicators suggesting potential recovery.
