Wall Street continued its upward momentum on Thursday, with major stock indexes reaching new highs as investors anticipated a likely interest rate cut by the Federal Reserve next week. The S&P 500 climbed 0.8% to set a record for the third consecutive day, while the Dow Jones Industrial Average surged 617 points, or 1.4%, and the Nasdaq composite gained 0.7%. Both also closed at all-time highs.
Bond yields fell following economic reports released Thursday, which are among the last data points before the Federal Reserve’s upcoming meeting. Most analysts expect the central bank to lower its main interest rate for the first time this year.
One report showed an increase in U.S. workers applying for unemployment benefits last week, suggesting that layoffs may be rising. This comes amid a slowdown in hiring, indicating possible weakness in the job market.
The Federal Reserve has been cautious about cutting rates throughout 2025 due to concerns that President Donald Trump’s tariffs could contribute to higher inflation. Lowering rates can sometimes fuel further price increases.
A separate report indicated that inflation continues to rise at a pace faster than what the Fed targets, but in line with economists’ expectations. Consumer prices were up 2.9% in August compared to a year earlier, slightly above July’s annual inflation rate of 2.7%. The Fed aims for a 2% inflation rate but may now view labor market weakness as a more pressing issue.
“Right now, inflation is a key subplot, but the labor market is still the main story,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.
Shares of companies expected to benefit from lower interest rates saw gains. Builders FirstSource rose by 4.5%, while Centene led with a jump of 9% after reporting business results through August that matched its profit forecast for the year.
Opendoor Technologies shares soared nearly 80% after naming Kaz Nejatian from Shopify as CEO and announcing investments totaling $40 million from its founders and associated firms.
Warner Bros. Discovery stock increased by almost 29% following news that Paramount Skydance is preparing a bid to acquire it; Paramount Skydance shares rose over 15%.
Kroger reported quarterly profits above analyst estimates and raised its profit outlook for the full year; its shares edged up by 0.3%. Oracle declined by just over 6%, giving back some gains from its previous session’s sharp rally.
At Thursday’s close, the S&P 500 stood at 6,587.47 points, with the Dow at 46,108 and Nasdaq at 22,043.
European markets also moved higher after the European Central Bank kept interest rates steady following earlier cuts; ECB President Christine Lagarde said future decisions are “not on a predetermined path.” France’s CAC 40 was up by 0.8%, and Germany’s DAX rose by 0.3%.
Asian markets were mixed: Shanghai stocks advanced by nearly two percent while Hong Kong slipped slightly.
In U.S. government bonds, yields eased as investors weighed prospects of policy changes ahead of next week’s Federal Reserve meeting.
