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U.S. stocks ended higher on Thursday, a day after the Federal Reserve cut interest rates by 25 basis points and assured more rate cuts this year, raising hopes that the economy might get some support in its recovery. All three major indexes ended in positive territory.
The Dow Jones Industrial Average (DJI) jumped 0.3% or 124.10 points, to close at 46,142.42 points.
The S&P 500 gained 0.5%, or 31.61 points, to finish at 6,631.96 points. Tech and industrial stocks were the biggest gainers.
The Technology Select Sector SPDR (XLK) gained 1.7%. The Industrials Select Sector SPDR (XLI) added 1.1%. Seven of the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq climbed 0.9%, or 209.40, to end at 22,470.73.
The fear gauge CBOE Volatility Index (VIX) was down 0.13% to 15.70. Advancers outnumbered decliners on the NYSE by a 1.87-to-1 ratio. On the Nasdaq, a 2.5-to-1 ratio favored advancing issues. A total of 19.30 billion shares were traded on Thursday, higher than the last 20-session average of 16.67 billion.
On the Nasdaq, there were 156 new highs and 42 new lows. On the S&P 500, there were 31 new 52-week highs and eight new lows.
Wall Street had a volatile session on Wednesday after the Federal Reserve announced a quarter percentage point interest rate cut. However, investors returned with renewed vigor on Thursday on optimism that the rate cut will help boost the economy.
All three major indexes hit new all-time intraday highs. However, the biggest gains on Thursday were the small-cap companies, with the Russell 2000 small-cap index advancing 2.4%.
Small-cap companies are likely to benefit the most from the recent rate cuts, given that they rely mostly on external funding.
The Fed’s recent rate cut was highly anticipated and investors were more eager to know about the future rate cut path. Federal Reserve Chairman Jerome Powell said on Wednesday that the rate cut was primarily because of a worsening labor market and cited the growing risks of employment compared to inflation.
He also warned that the inflationary risks must be managed carefully. However, he still indicated two more rate cuts by the end of this year. Investors cheered the decision, sending stocks on a rally on Thursday.
Thursday’s rally was primarily led by tech stocks. Intel Corporation (INTC) was one of the biggest gainers, with the company recording one of its best days in decades. Intel’s shares surged 22.8%, recording its biggest single-day gain since October 1987, after NVIDIA Corporation (NVDA) announced that it will invest $5 billion in the company to co-develop data center and PC chips. NVIDIA’s shares ended 3.5% higher. Intel has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
