U.S. Stocks Close at Record Highs as Fed Easing and Strong Data Drive Rally

U.S. equities climbed to new records on Thursday, led by small caps and technology, as investors embraced the Federal Reserve’s latest rate cut and upbeat economic data

The S&P 500 gained 0.48% to finish at 6,631.96, while the Nasdaq Composite rose 0.94% to 22,470.73, both setting fresh closing highs. The Dow Jones Industrial Average added 124 points, or 0.27%, ending at 46,142.42. The Russell 2000 surged 2.4% to 2,468, breaking its November 2021 record close.

Market Leadership

Big tech was broadly higher, with semiconductors driving outsized gains. Intel (INTC) jumped nearly 23% after Nvidia (NVDA) announced a $5 billion investment to co-develop data center and PC chips, lifting Nvidia shares by 3.5%. Other outperformers included airlines, software, apparel, asset managers, machinery, autos and suppliers, road and rail operators, credit cards, crypto-linked names, and GLP-1 drug makers.

Most-shorted and meme stocks also rallied, while laggards included industrial metals (Nucor), HPCs, entertainment, restaurants, payments, staples retailers, utilities, and commodity chemicals.

Macro Tailwinds

The rally was underpinned by optimism that Fed easing will provide ongoing support, particularly for small caps more reliant on external financing. Longer-dated Treasury yields rose 7 bps after touching their lowest since April, steepening the curve. The dollar index climbed 0.5%, while gold fell 1.1%, WTI crude (November) slipped 0.7%, and bitcoin futures rose 1.6%.

Economic data provided further encouragement:

• The Philadelphia Fed manufacturing index surged to 23.2 in September, well above consensus of 3.0 and August’s 0.3, with new orders and shipments accelerating and price pressures easing.
• Initial jobless claims fell to 231K, below expectations and reversing last week’s fraud-distorted spike. Continuing claims also declined to 1.92M.

Corporate Highlights

• Apple (AAPL): Planning a 10% increase in iPhone shipments next year, aided by a foldable version.
• Google (GOOGL): Antitrust probe in China reportedly dropped.
• Meta (META): Unveiled new smartglasses with AI-enabled displays.
• Novo Nordisk (NVO): Reported Ozempic reduced cardiac events by 23% in new trial data.
• CrowdStrike (CRWD): Long-term guidance cheered at analyst day.
• PayPal (PYPL): Rose on partnership announcement with Google.
• Nucor (NUE): Guided Q3 EPS down 18% sequentially.
• NRG Energy (NRG): Raised 2025 guidance by 8%.
• Dexcom (DXCM): Fell on short-seller claims of G7 inaccuracies.
• Cracker Barrel (CBRL): Weak after soft FY26 traffic outlook.
• Cooper (COO): Expanded buyback authorization by $1B.
• FactSet (FDS): Missed earnings, cut FY26 guidance.
• AmSurg (AS): Higher on positive Q3 preannouncement.
• 89bio (ETNB): To be acquired by Roche (ROG) for up to $3.5B.

Fed Focus and Outlook

Thursday’s rally came a day after the Fed cut rates by 25 bps, its first reduction of 2025. Markets are now pricing in as much as 175 bps of additional cuts this year. While Chair Jerome Powell framed the move as “risk management,” investors interpreted the decision as a pivot toward prioritizing growth.

“I’m not ever fighting this Fed,” Appaloosa’s David Tepper told CNBC, noting that markets are discounting nearly two more cuts this year. However, he cautioned the Fed risks overheating markets if easing goes too far.

With Thursday’s gains, the S&P 500 is up 0.7% for the week, while the Russell 2000 has climbed 3%. Both are on track for their sixth weekly advance in the past seven.

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