Wall Street bulls are stampeding across the market today, spurred by the Federal Reserve’s bold decision to cut interest rates for the first time in over four years. The central bank’s surprise 50-basis-point reduction caught analysts off guard and sent the U.S. stock market soaring to new record highs at the opening bell. The S&P 500, a broad measure of the stock market, climbed to an unprecedented 5,700 points, while the Dow Jones Industrial Average reached an astonishing 42,000 points.
The first 30 minutes of trading saw the S&P 500 and Dow Jones gain 1.4% and 1%, respectively. The Nasdaq 100, home to tech giants, climbed 1.5%, but the Russell 2000, representing small-cap stocks, outperformed with a surge of over 2%. This rally was primarily driven by the so-called ‘Magnificent Seven’: Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta Platforms, and Tesla. Each of these tech behemoths is experiencing daily gains ranging from 1.5% to 4.5%, solidifying their dominance in the market.
Adding fuel to the fire, Thursday’s economic data further boosted investor confidence. Weekly jobless claims came in well below expectations, suggesting a lower-than-expected rise in unemployment. This was a welcome sign for the economy, as it alleviated fears of a potential slowdown. Continuing jobless claims also dropped more than anticipated, hinting at the absorption of long-term unemployed individuals into the job market. This positive news painted a more optimistic picture for the economy.
Wall Street analysts wasted no time adjusting their expectations in light of the Fed’s rate cut. Anticipation for additional rate cuts is now growing, shifting from the cautious tone expressed in the Fed’s September ‘dot plot’ and Chair Jerome Powell’s comments during the press conference. Notably, Goldman Sachs economist Jan Hatzius revised his forecast, moving from expecting a 25-basis-point cut every other meeting to predicting a rate cut at every meeting. He even left the door open for back-to-back 50-basis-point reductions in November.
Among the S&P 500, the top performers as of 10 a.m. ET were:
* Darden Restaurants, Inc. (DRI) – 7.46%
* Airbnb, Inc. (ABNB) – 5.27%
* Cadence Design Systems, Inc. (CDNS) – 4.40%
* Lam Research Corporation (LCRX) – 4.34%
* NVIDIA Corporation (NVDA) – 4.33%
In the Dow Jones Industrial Average, the top five performers were:
* Apple Inc. (AAPL) – 3.02%
* Salesforce, Inc. (CRM) – 3.01%
* The Goldman Sachs Group, Inc. (GS) – 2.80%
* Caterpillar Inc. (CAT) – 2.71%
* American Express Company (AXP) – 2.67%
The market’s exuberance is a testament to the power of the Federal Reserve’s actions and the positive economic data. As the dust settles, investors will be watching closely to see if the Fed’s rate cut proves to be a game-changer or a temporary boost for Wall Street.
