US stocks closed at record highs on Thursday, buoyed by renewed optimism that the Federal Reserve has embarked on an easing path. Investors interpreted this week’s quarter-point rate cut as the start of a cycle focused more on growth than inflation. The S&P 500 climbed 0.48% to 6,631.96, the Nasdaq jumped 0.94% to 22,470.73, and the Dow Jones Industrial Average added 124 points, or 0.27%, to 46,142.42. Each index touched fresh intraday records during the session.
The Russell 2000 small-cap index gained 2.4% and set a new record, its first since late 2021. Smaller companies, often more dependent on external funding, tend to benefit the most from lower interest rates.
Tech stocks in focus
The rally extended to technology shares. Intel posted its best day in nearly four decades, soaring 22.8% after Nvidia said it would invest US$5 billion to co-develop data centre and PC chips. Nvidia itself rose 3.5%.
Other tech benchmarks also hit records, including the NYSE Fang+ Index and the Philadelphia Semiconductor Index.
Fed cut energises investors
Wednesday’s quarter-point rate cut was widely expected, but investors welcomed the central bank’s forecast of two additional cuts this year. Fed Chair Jerome Powell described the move as “risk management,” yet markets interpreted it as a pivot toward boosting growth.
The S&P 500 is up 0.7% for the week, on track for its sixth gain in seven weeks. The Nasdaq has risen 1.5%, and the Russell 2000 is pacing nearly 3% higher.
Global outlook
Australian shares are set to follow Wall Street higher. ASX 200 futures point to a 41-point rise, or 0.5%, at the open, with enthusiasm lifted by Nvidia’s surprise backing of Intel.
Currency and commodity markets were mixed: the Australian dollar slipped to US66.11¢, gold eased 0.4% to US$3,644 an ounce, and Brent crude fell 0.6% to US$67.52 a barrel.
Looking ahead, traders are watching New Zealand’s August trade data and the Bank of Japan’s policy meeting. Analysts expect no change in Tokyo this week but see a high probability of another hike by January.
