Wall Street’s record-setting rally kept surging on Thursday, as a fresh batch of mixed U.S. economic data signaled that the Federal Reserve may finally cut interest rates at its next policy meeting — potentially giving another jolt to an already red-hot stock market.
The S&P 500 climbed 0.8%, hitting an all-time high for the third straight day, according to the Associated Press.
The Dow Jones Industrial Average jumped 617 points (1.4%), and the Nasdaq composite rose 0.7% — both also notching new record highs.
All told, the S&P 500 rose 55.43 points to 6,587.47. The Dow Jones Industrial Average jumped 617.08 to 46,108.00, and the Nasdaq composite gained 157.01 to 22,043.07.
Market momentum was fueled by reports that more Americans filed for unemployment benefits last week, an indicator of rising layoffs and further weakness in the labor market. It’s the kind of softening that Wall Street has been hoping for — just enough to push the Fed toward cutting rates, but not so severe that it triggers a recession.
“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.
Thursday’s data dump also included a report on consumer inflation, which showed prices in August were 2.9% higher than a year earlier, up slightly from July’s 2.7%. That’s still above the Fed’s 2% target, but traders believe the weakened job market now outweighs inflation concerns.
The Fed has just one tool to fix either of them, and moving interest rates to help one often means hurting the other in the short term.
The Fed has been hesitant to cut rates in 2025, largely due to concerns that President Donald Trump’s tariffs could add to inflationary pressures — but the latest signals suggest the central bank may move forward with a cut next week.
Investors snapped up shares of companies that typically benefit from lower interest rates, including homebuilders and real estate firms.
Builders FirstSource soared 4.5%
Opendoor Technologies exploded 79.5% after naming Shopify COO Kaz Nejatian as CEO and announcing a $40 million investment from its founders
Warner Bros. Discovery surged 28.9% amid takeover speculation involving Paramount Skydance, which itself gained 15.6%
“The suspect brought quite a bit of ammunition with him, and he continued to reload,” [editorial error omitted]
Kroger rose 0.3% after beating profit expectations, even though its revenue fell slightly short. Meanwhile, Oracle slid 6.2%, giving back a portion of its massive 36% rally from the previous day — the company’s best performance since 1992.
In Europe, markets edged higher after the European Central Bank held interest rates steady, signaling a continued pause after recent cuts.
France’s CAC 40 rose 0.8%, and Germany’s DAX added 0.3%. In Asia, Shanghai surged 1.7%, while Hong Kong dipped 0.4%.
The yield on the 10-year Treasury eased to 4.02%, down from 4.04% the day before — a reflection of investor confidence that rate cuts are on the horizon.
Treasury yields eased in the bond market following the economic reports, which were some of the final data releases left that could sway the Federal Reserve’s thinking before its meeting next week.
