Stocks Rally Ahead of Fed Decision
Wall Street surged again Thursday, with the S&P 500, Dow Jones, and Nasdaq all setting fresh records. The rally came after mixed U.S. economic data cleared the way for the Federal Reserve to cut interest rates at its meeting next week.
The S&P 500 rose 0.8%, marking its third consecutive all-time high. The Dow climbed 617 points, or 1.4%, while the Nasdaq gained 0.7%. Treasury yields also slipped, signaling growing investor confidence that the Fed will move forward with its first rate cut of the year.
Signs of a Slowing Job Market
Economic reports released Thursday revealed a jump in new jobless claims, suggesting layoffs may be rising. While the labor market has recently balanced between slow hiring and stable employment, the uptick in layoffs could increase pressure on the Fed.
Investors are hoping for a slowdown that is measured enough to trigger rate cuts without tipping the economy into recession. “Right now, inflation is a subplot, but the labor market is still the main story,” said Ellen Zentner, chief economic strategist at Morgan Stanley.
Inflation Stays Above Target
A fresh inflation report showed consumer prices rose 2.9% in August compared to last year, up slightly from July’s 2.7%. While this remains above the Fed’s 2% goal, traders believe the weakening job market will outweigh inflation concerns in the central bank’s decision-making.
Market Winners and Movers
Several companies posted big gains as the market rallied:
Builders FirstSource rose 4.5% as lower rates could boost housing demand.
Centene jumped 9% after reaffirming its annual profit forecast.
Opendoor Technologies skyrocketed 79.5% after naming Shopify’s COO as its new CEO and announcing new investments.
Warner Bros. Discovery surged 28.9% on reports of a potential takeover bid from Paramount Skydance, which also gained 15.6%.
Meanwhile, Oracle slipped 6.2%, giving back part of its historic rally from the day before.
Global Markets React
In Europe, stocks rose modestly after the European Central Bank left rates unchanged. France’s CAC 40 climbed 0.8%, and Germany’s DAX added 0.3%. In Asia, Shanghai stocks gained 1.7%, while Hong Kong’s market dipped 0.4%.
Bond markets also reflected optimism, with the 10-year U.S. Treasury yield easing slightly to 4.02%.
What’s Next for Wall Street
All eyes are now on the Federal Reserve’s meeting next week, where expectations for a rate cut remain high. The decision could set the tone for global markets heading into the final stretch of 2025.
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