Key points

  • The S&P 500, Nasdaq, and Dow Jones all hit new all-time highs after the Fed cut rates.
  • Tech led the gains, with Tesla, Apple, Meta Platforms, and Nvidia in particular.
  • Fed confident in inflation control: Setting the stage for further rate cuts.

The S&P 500 index posted impressive gains on Thursday, reaching a new all-time high. This performance was the result of the Federal Reserve’s decision to cut interest rates by 50 basis points. The prospect of further soft monetary policy outlined by the regulator significantly strengthened investor optimism.

Along with the S&P 500, the Nasdaq and Dow Jones Industrial Average also rose, indicating positive sentiment across the entire U.S. stock market.

Tech and banking stocks in green zone

The US stock market demonstrated confident growth on Thursday, reaching new historical highs. The Dow Jones Industrial Average index exceeded the 42,000 mark for the first time, which proves the positive dynamics in the blue-chip stock market.

The growth trend also affected the technology sector. Shares of companies that led the market this year continued to strengthen: Tesla showed growth of more than 7%, and shares of technology giants Apple and Meta Platforms added about 4%. Nvidia, a key player in the field of artificial intelligence, also demonstrated significant growth, which had a positive effect on the dynamics of the PHLX semiconductor index.

Positive dynamics were also observed in other sectors of the economy. Of the eleven sector indices of the S&P 500, eight ended trading in the green zone. The most significant growth was shown by the information technology sector, which added 3.08%. Positive dynamics should also be noted in the consumer discretionary sector, which grew by 2.2%.

However, there were some negative moments in the market. FedEx shares fell by 10% after the company adjusted its revenue forecasts for the next fiscal year.

The banking sector also showed positive dynamics. The S&P 500 banks index rose by 2.5%, thanks to the growth of shares of such large banks as Citigroup and Bank of America. This is due to the decision of these financial institutions to reduce their base rates.

Fed ready to cut rates in the future

The published data on the number of initial jobless claims, which exceeded analysts’ forecasts, increased global investment optimism. This event became another catalyst for the growth of markets against the backdrop of easing monetary policy.

The decision of the Federal Reserve to cut the key interest rate, taken on Wednesday, met and even exceeded market expectations. In its statement, the Fed expressed confidence that the inflation process in the United States is under control. Fed Chairman Jerome Powell emphasized the resilience of the American economy and hinted at the possibility of further rate cuts in the future.

Analysts positively assessed the results of the Fed meeting. James Ragan, director of wealth management research at D.A. Davidson, noted that the Fed presented a fairly optimistic view of the state of the U.S. economy. In his opinion, this will lead to a flow of capital into those segments of the market that were previously undervalued.

Investment banks also adjusted their forecasts. BofA Global Research raised its estimate for total rate cuts by year-end to 75 basis points from 50.