The stock market was shaking off its rate-cut hangover on Thursday.
The S&P 500 was up 0.7%. The Nasdaq Composite was up 1%. The Dow was up 200 points, or 0.4%. All three were on track to set fresh closing highs.
The major indexes were mixed on Wednesday after the Federal Reserve lowered interest rates by quarter of a point and forecast two additional cuts through December and a third cut in 2026.
“Investors apparently slept on the Fed’s announcement yesterday and woke up in a good mood,” writes Bespoke Investment Group co-founder Paul Hickey. “The US strength follows what was a mostly positive night in Asia, where China was the only country to trade lower, while Japan and Korea both shot higher by over 1%.”
Chip stocks were rallying, led by Intel, after Nvidia announced it would invest $5 billion in the struggling chip maker and partner with it to co-develop “multiple generations of custom data center and PC products.”
“While obvious, at first glance the deal seems positive for Intel (money is helpful, and having [Nvidia CEO Jensen Huang’s] blessing is priceless, though a 30% move is something…) and NVIDIA, and incrementally negative for AMD,” writes Bernstein analyst Stacy Rasgon.
The rest of the market was looking to climb to fresh highs as investors continued to digest Federal Reserve Chairman Jerome Powell’s comments from his Wednesday press conference.
“With another two cuts this year, we should see small caps and banks outperform,” writes Andrew Brenner, head of international fixed income at NatAlliance Securities. “AI/Mag7 won’t lose their bid, but new records will be evident… We thought there would be more of a corrective move in equities, but the Fed meeting was not the catalyst for that.”