The Federal Reserve’s big rate cut sparked a furious global rally in stocks as traders bid up technology shares and other risky assets in a bet that lower borrowing costs will help keep unemployment low without reigniting inflation.
The rally was a delayed yet emphatic response to the central bank’s decision Wednesday to cut interest rates by a half percentage point that pushed the S&P 500 to its first record high since mid-July and the Dow to close above 42000 points for the first time.
Led by a 7.4% gain in shares of Tesla and a 4% jump in Nvidia, the Nasdaq rose 2.5% on Thursday, its fourth-sharpest rally of 2024. The biggest gain of the year for the tech-heavy index was a 3% increase on Feb. 22.
Market Snapshot
The S&P 500 climbed 1.70% to end the session at 5,713.64 points, its highest close ever. The Nasdaq gained 2.51% to 18,013.98 points, while the Dow Jones Industrial Average rose 1.26% to 42,025.19 points.
Market Movers
Tesla jumped 7.4%. Lower interest rates make cars, which tend to be bought with financing, more affordable, reducing pressure to cut prices and boosting demand.
Nvidia rose 4%, Micron Technology was up 2.2%, Advanced Micro Devices rose 5.7%, and Broadcom gained 3.9% as chip makers jumped after the Fed slashed rates.
Shares of FedEx Corp. tumbled 11% after hours on Thursday after the package-delivery giant tempered its full fiscal-year outlook amid continued "weaker-than-expected" shipping demand.
Shares of Nike Inc. rallied 7% after hours on Thursday after the sneaker and athletic-wear maker said that company veteran Elliott Hill would replace John Donahoe as its chief executive next month - a change that follows a slump in the company's stock price and months of subdued demand for its products.
Enphase Energy fell 2%, and First Solar fell 0.6% after the Fed cut interest rates, even though solar companies are seen as beneficiaries of lower borrowing costs. Demand for solar products took a hit amid an environment of higher rates.
Mobileye Global rose 15% after Intel said it currently has no plans to sell a majority interest in the autonomous-driving company. Intel was up 1.8%.
Progyny, which handles fertility-care-insurance coverage for employers, plunged 33% after the company said in a regulatory filing that it was notified by a “significant” client that the client will be terminating a services agreement, effective Jan. 1. The client accounted for about 670,000 members as of June 30, and made up 12% of Progyny’s revenue for the first six months of the year. Progyny continues to anticipate an increase in its overall member count in 2025.
Darden Restaurants, the parent company of Olive Garden and LongHorn Steakhouse, rose 8.3% after backing guidance for fiscal 2025 adjusted profit of $9.40 to $9.60 a share even as fiscal first-quarter earnings were lower than expected. Darden also announced a delivery deal with Uber Technologies.
DoorDash was up 3.6% to $137.29. Analysts at BTIG upgraded shares of the food-delivery company to Buy from Neutral with a price target of $155.
Market News
Biden expects Fed to continue cutting interest rates
U.S. President Joe Biden said on Thursday he expects the Federal Reserve to continue cutting interest rates and vowed that his administration would keep working to lower costs for Americans.
Biden used an Economic Club of Washington event with 500 guests to promote his administration's policies to bring down inflation after the COVID-19 pandemic and Russia's invasion of Ukraine, issues that have driven voters' anxiety.
Disney to Stop Using Slack Following Hack That Exposed Company Data
Disney plans to transition away from its use of Slack as a companywide workplace collaboration system, a move that comes after a hacking entity stole and leaked online more than a terabyte of company data.
The company’s Chief Financial Officer Hugh Johnston announced the planned change in an internal memo this week, saying most of Disney’s businesses would stop using the service later this year. Many teams at the company had already started to transition to “streamlined enterprise-wide collaboration tools,” said the memo, which was reviewed by The Wall Street Journal.