A trader reacts on the floor at the New York Stock Exchange in New York City, U.S., August 22, 2025.
Brendan McDermid | Reuters
Stocks closed at record highs on Thursday, with smaller equities seeing the biggest boost, as the Federal Reserve signaled this week it was embarking on an easing rate path, reinvigorating investors and raising hopes for a ratcheting up of economic growth.
The S&P 500 closed up 0.48% at 6,631.96, while the Nasdaq Composite popped 0.94% to settle at 22,470.73. The Dow Jones Industrial Average added 124 points, or 0.27%, to close at 46,142.42.
Each of the major U.S. indexes notched a fresh all-time intraday high on Thursday, just a day after stocks had a volatile trading session Wednesday in the wake of the Fed’s rate cut.
The Russell 2000 small-cap index gained 2.4% and hit an intraday record. The benchmark last posted an all-time closing high in November 2021. Companies with smaller capitalizations tend to benefit from lower interest rates as they often rely more on external funding for their operations and growth compared to larger, cash-rich firms. Not to mention, they are more linked to the economic cycle than Big Tech stocks riding the AI trend.
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Russell 2000 performance over the past five years.
However, shares of some major tech companies were part of Thursday’s rally as well. Intel shares rallied 22.8% after Nvidia said it will invest $5 billion in the chipmaker to co-develop data center and PC chips. It was Intel’s best day in nearly 38 years. Shares of Nvidia jumped 3.5%.
The gains follow a volatile day of trading Wednesday after the Fed, as anticipated, slashed its benchmark rate by a quarter percentage point. The central bank forecast two more hikes this year, encouraging investors that hoped the Fed would keep going on an easier interest-rate path. Traders looked past Chair Jerome Powell’s characterization that the cut was part of “risk management” and assumed the Fed was pivoting to more of a focus on reviving economic growth and worrying less about inflation.
“I don’t love the multiples, but how do I not own it?” said Appaloosa Management’s David Tepper to CNBC’s “Squawk Box” Thursday. “I’m not ever fighting this Fed especially when the markets tell me … one and three quarter more cuts before the end of the year, so that’s a tough thing not to own.”
Tepper did warn the Fed now risks overheating the markets and economy if it lowers rates too far next year.
Thursday’s gains put the major benchmarks on track for solid weekly gains. The S&P 500 is up 0.7% for the week, on pace for its sixth weekly gain in the last seven. The 30-stock Dow is up nearly 0.7% week to date, while Nasdaq has gained 1.5%. The Russell 2000 is the biggest winner on a weekly basis as well, on track for a nearly 3% gain.