Wall Street soared on Thursday, with the Dow and S&P 500 hitting another intraday record, a day after the Federal Reserve kicked off its easing cycle with a half-percentage point reduction and forecast more cuts were on the horizon.
In late trading, the Dow Jones Industrial Average rose 592 points, or 1.4%, to 42,095. The blue-chip index had risen more than 650 points to a record high of 42,160.91.
The S&P 500 gained 1.8% and the Nasdaq rose more than 450 points, or 2.6%.
Rate-sensitive growth stocks that have led much of this year’s rally rose. Microsoft added 2%, Tesla gained 7% and Apple advanced 3.8%.
Semiconductor stocks such as Nvidia rose 5.3%, while Advanced Micro Devices gained 3.5% and Broadcom added 3.8%, sending the Philadelphia SE Semiconductor Index up 3.6%.
The Russell 2000 index also rose 2.1% along with the broader market as a lower interest rate environment could mean lower operating costs and higher profits for credit-reliant companies.
After delivering its wide-ranging verdict on Wednesday, the Fed forecast rates will fall another 50 basis points by year-end and unveiled macroeconomic projections that analysts say reflect an ideal scenario, where growth is steady and inflation and unemployment remain low.
“Markets are responding well to yesterday’s message from the Federal Reserve. They wanted to hear that we were not falling into a recession, and Chairman Powell assured that the economy is on the right track,” said Bret Kenwell, investment analyst at eToro.
“A soft landing can still be expected, which remains the default expectation. However, there is still clear concern that the labor market is moving from a period of weakness to one of weakness.”
Data on the day showed jobless claims for the week ending Sept. 14 came in at 219,000, lower than economists’ estimates of 230,000.
Traders now see a 61.1% chance that the central bank will cut interest rates by 25 basis points at its November meeting, according to the CME Group’s FedWatch Tool.
BofA Global Research now expects a total of 75 basis points of rate cuts by the end of this year, compared with 50 basis points previously forecast.
Evercore ISI data going back to 1970 showed the S&P 500 posted an average gain of 14% in the six months following the first taper of a rate-cut cycle.
September has been a disappointing month for U.S. stocks overall: The S&P 500 has averaged a loss of 1.2% since 1928, but has gained more than 1% so far this month.
The broader banking index trended higher by 2%, boosted by big banks such as Citigroup and Bank of America after they lowered their respective prime rates.
Among individual firms that moved, fertility benefits management company Progyny fell 32% after a major client notified the company that it had decided to exercise a 90-day option to terminate its services agreement.
