4:15pm: Chips stocks surge
The Dow Jones and the S&P 500 closed at record highs on Thursday, as a tech surge led by AI chipmakers Nvidia and AMD boosted the Nasdaq.
The Dow added 1.3% at 42,025 points, the S&P 500 was up 1.7% at 5,713 points and the Nasdaq was up 2.5% at 18,013 points.
AMD booked a 5.7% gain to $156.74 while Nvidia added 4% at $117.87.
3:15pm: ‘Missing piece’ for tech stocks
The Fed kicking off a rate-cutting cycle is just the boost tech stocks needed, analysts at Wedbush believe.
“Yesterday the Fed finally ripped the band-aid off and cut 50 bps with a dovish dot plot into 2025 and that we view as a very bullish backdrop for the Big Tech and AI Revolution risk-on trade into 2025,” they wrote.
“This was the missing piece in the puzzle that we believe many investors were waiting for to signal the green light is back on for the tech growth trade into year-end and 2025.”
1:07pm: Record-breaking session
Stocks continued to rally in the wake of a mega rate cut from the Federal Reserve, with the Dow Jones and S&P 500 on track to close at record highs.
The Dow Jones was up 1.3% at 42,025 points while the S&P 500 added 1.8% at 5,720 points.
The tech-laden Nasdaq also made impressive gains, adding 2.8% at 18,066 points.
“Investors seem very pleased with the Fed’s 50 basis points cut and its optimistic assessment of the US economy. Stock markets across the globe have made headway, confident that the US central bank has their back,” IG chief market analyst Chris Beauchamp commented.
“New record highs for the Dow and S&P 500 seem to lead the way for other indices, with no sign yet of any of the weakness that often bedevils the second half of September.”
11:23am: Fed ‘right-sizes’ monetary policy
The Federal Reserve is off to an aggressive start to its rate-cutting cycle but signalled this action was a “recalibration of policy” rather than the beginning of a series of large reductions, analysts at Deutsche Bank have highlighted.
In a note to clients, analysts wrote that Fed chair Jerome Powell navigated the communication challenges well during his press conference on Wednesday afternoon.
“The 50 basis point reduction was framed as a one-off to right size monetary policy to lower inflation and the shift in the risk distribution,” they wrote.
“He projected a view of a fundamentally strong economy and a labor market that was still historically solid, even if it has cooled. This tone avoided adverse signals about the economy and aimed to dissuade the market from pricing a steeper descent to neutral.”
The bank’s analysts continue to expect a sequence of 25 basis point reductions through the March 2025 FOMC meeting, before the Fed shifts to a quarterly pace with subsequent reductions in June and September of next year.
“That leaves the fed funds rate in the 3.25% to 3.5% range at end-2025, near our estimate of nominal neutral,” they wrote.
9.59am: S&P and Dow hit new highs
As expected, the S&P 500 and Dow Jones have notched up new all-time highs, leaping 1.5% to over 5,700 and 1.2% to above 42,000 higher respectively.
The Nasdaq Composite has outdone them both on the day, surging up 2.1%, while the small cap home of the Russell 2000 has jumped 1.7%.
Apple Inc (NASDAQ:AAPL, ETR:APC) and NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) have both gained over 4% to help drive the tech-heavy index, with semiconductor giants Broadcom, ASML and AMD also up between 3% and 5%.
There are only seven fallers in the Nasdaq 100, led by American Electric Power and Dollar Tree.
8.30am: Strong rebound for Nasdaq, S&P and Dow expected
A strong rebound is expected on Wall Street on Thursday, led by the Nasdaq's tech giants as investors continue to mull yesterday's Federal Reserve rate cut.
Futures for the Nasdaq 100 were pointing to a 2.1% bounce, with new record highs anticipated for the S&P 500 and Dow Jones with futures rising 1.6% and 1.2%.
This followed a session yesterday that saw the Nasdaq Composite and S&P fall 0.3% and the Dow dip 0.25%.
The US dollar levelled off after dropping back in the wake of the Fed's rate cut of 50 basis points on Wednesday. The dollar index was holding around 100.85.
In the commodities space, gold remained well bid after hitting an all-time high of $2600 in the middle of Fed chief Jerome Powell's statement. Oil prices were also providing support for the energy sector, with WTI up 1.3% to $70.76.
The CME’s FedWatch tool shows that market participants are leaning towards a further 75bps of rate cuts before year-end, with traders seeing a 67% chance that the central bank will make a 25bps cut at the November meeting.
Some market watchers pointed to long-term data showing that the S&P 500 on average gains 14% over the six months following the rate cut in a cycle.
Market analyst David Morrison at Trade Nation said: "The rate cut has boosted all risk assets this morning, and sentiment is currently strongly positive.
"But some will be asking why a 50 bps cut was warranted at this time, given the underlying strength of the US economy. While the unemployment rate has ticked higher over the last twelve months, part of this is due to more people now actively looking for work, as the economy improves. On the other hand, recent Non-Farm Payroll numbers have disappointed, casting some uncertainty over recent economic growth data.
"It will be interesting to see if this morning’s rally continues through the main session, or if it starts to fade into the weekend. Sentiment is fickle, and as we’ve just seen, markets can turn sharply."