U.S. stock markets reached new all-time highs on Thursday, driven by a surge in technology shares and investor optimism about potential interest rate cuts from the Federal Reserve. The S&P 500, Dow Jones Industrials, and Nasdaq 100 all closed at record levels, with semiconductor stocks leading the gains.
The market's positive momentum was significantly boosted by news of a major partnership in the chip industry. Intel's stock soared after Nvidia announced a $5 billion investment and a plan to co-develop chips, signaling strong confidence in the sector's future growth.
Key Takeaways
- Major U.S. stock indexes, including the S&P 500, Dow Jones, and Nasdaq 100, closed at new record highs on Thursday.
- Intel's stock surged over 22% following Nvidia's announcement of a $5 billion investment and a joint chip development partnership.
- The broader semiconductor sector experienced significant gains, lifting the entire technology market.
- Investor sentiment was also fueled by expectations of further interest rate cuts by the Federal Reserve later this year.
- Stronger-than-expected economic data, particularly in the labor market, pushed government bond yields higher, creating a mixed economic picture.
Market Performance and Key Drivers
On Thursday, the S&P 500 Index ($SPX) increased by 0.48%, the Dow Jones Industrials Index ($DOWI) rose by 0.27%, and the technology-focused Nasdaq 100 Index ($IUXX) climbed 0.95%. All three indexes established new closing records, reflecting a broad-based rally.
The primary catalyst for this upward movement was the performance of technology stocks, especially within the semiconductor industry. This was a direct result of a landmark announcement involving two of the sector's biggest names.
The Nvidia-Intel Partnership
Nvidia revealed it would invest $5 billion in Intel. The two companies also stated they would collaborate on developing new chips for personal computers and data centers. This strategic alliance was viewed by investors as a major positive for Intel and the U.S. chip industry, leading to a significant re-evaluation of Intel's stock value.
Beyond the tech sector, a general risk-on sentiment prevailed in the markets. This was largely due to speculation that the Federal Reserve will continue to ease its monetary policy. Investors are increasingly betting that the central bank will prioritize supporting the labor market, even if it means tolerating some inflation risks.
Economic Data and Federal Reserve Outlook
While the market rallied, economic data released on Thursday presented a more complex picture. Several indicators came in stronger than anticipated, which typically suggests the economy is robust enough to handle higher interest rates. This led to an increase in government bond yields.
Key economic reports included:
- Weekly Initial Unemployment Claims: The number of Americans filing for unemployment benefits fell by 33,000 to 231,000. This figure was significantly lower than the 240,000 expected, indicating a stronger labor market.
- Philadelphia Fed Business Outlook: This survey for September jumped by 23.5 points to 23.2, an eight-month high. Economists had only forecast a reading of 1.7.
- Leading Indicators: In contrast, the index of leading economic indicators for August fell by 0.5% month-over-month, a larger decline than the expected 0.2% drop.
Fed Rate Cut Expectations
Despite some strong economic signals, the market is firmly anticipating further easing from the Federal Reserve. According to market pricing, there is a 94% probability of a 25-basis-point interest rate cut at the next Federal Open Market Committee (FOMC) meeting scheduled for October 28-29.
This follows the Fed's decision on Wednesday to cut its benchmark rate by 25 basis points. The central bank also signaled it could implement an additional 50 basis points of cuts before the end of the year. However, comments from Fed Chair Jerome Powell highlighted ongoing inflation risks, which briefly tempered market enthusiasm.
Bond Market and Interest Rate Movements
The government bond market reacted to the strong economic data and the Fed's communications. The yield on the 10-year U.S. Treasury note rose, reaching a two-week high of 4.14% during Thursday's session. It ultimately closed up 1.4 basis points at 4.101%.
Higher bond yields can sometimes be a negative factor for stocks, as they offer investors a safer return and increase borrowing costs for companies. On Thursday, however, the optimism surrounding technology stocks and potential Fed easing overshadowed the rise in yields.
In Europe, government bond yields also moved higher. Germany's 10-year bund yield finished at its session high, up 5.1 basis points to 2.726%. The 10-year UK gilt yield also ended up 5.1 basis points at its high of 4.676%.
The Bank of England, in a 7-2 vote, decided to keep its official bank rate unchanged at 4.00%. Governor Andrew Bailey emphasized that any future rate cuts would need to be made "gradually and carefully."
Individual Stock Highlights
The day's trading was marked by several significant moves in individual company stocks, largely driven by corporate news and analyst ratings.
Major Gainers
- Intel (INTC): The chipmaker was the standout performer, closing up more than 22%. The rally extended to other semiconductor firms, with KLA Corp (KLAC) and Applied Materials (AMAT) gaining over 6%. Nvidia (NVDA) itself rose more than 3%.
- 89bio (ETNB): The stock skyrocketed by over 85% after Swiss pharmaceutical giant Roche announced it would acquire the company for $3.5 billion, or $14.50 per share.
- CrowdStrike (CRWD): Shares jumped over 12% after the cybersecurity firm presented a strong preliminary outlook for fiscal year 2027 during an investor briefing.
Notable Decliners
- FactSet Research Systems (FDS): The financial data company's stock fell more than 10% after it reported quarterly earnings that missed expectations and provided a weaker-than-anticipated forecast for 2026.
- Darden Restaurants (DRI): Shares of the Olive Garden parent company dropped over 7% after its 2026 earnings forecast fell short of analyst consensus.
- ARM Holdings (ARM): The chip designer's stock declined more than 4%, reacting to the competitive implications of the new Intel-Nvidia partnership.
Global Market Context
Overseas markets showed a mixed performance on Thursday. In Europe, the Euro Stoxx 50 index climbed 1.62% to a 3.5-week high, sharing in the global optimism.
In Asia, Japan's Nikkei Stock 225 continued its strong run, rallying 1.15% to close at a new record high. However, China’s Shanghai Composite Index pulled back from a 10-year high, closing down 1.15%.
