US Stock Indexes Hit Record Highs on Fed Rate Cut Expectations

US stock indexes closed higher on Thursday, setting fresh all-time records. The S&P 500 gained 0.48%, the Nasdaq 100 climbed 0.95%, and the Dow Jones advanced 0.27%. Optimism was fueled by expectations of further monetary easing from the Federal Reserve, driving strong risk-on sentiment.

Technology stocks led the charge, with Intel soaring more than 22% after Nvidia announced a $5 billion investment and plans to co-develop chips for PCs and data centers. This sparked a broad rally in the semiconductor sector, boosting the overall market.

On Wednesday, the Fed cut interest rates by 25 basis points and signaled the possibility of an additional 50 bp in easing by year-end. However, hawkish comments from Chair Jerome Powell on persistent inflation risks drove Treasury yields higher, tempering investor enthusiasm.

Bond yields rose again Thursday, with the 10-year Treasury hitting a two-week high at 4.14%. Weekly jobless claims dropped to 231,000, better than the expected 240,000, while the Philadelphia Fed manufacturing index jumped to an eight-month high. These stronger-than-expected reports reinforced concerns that the Fed may need to balance rate cuts with inflation control.

Still, futures markets are pricing in a 94% probability of another 25 bp cut at the October 28–29 FOMC meeting, keeping equities in bullish territory.

European and Asian stocks traded mixed. The Euro Stoxx 50 rose 1.62% to a 3.5-week high, Japan’s Nikkei 225 gained 1.15% to a new record, while China’s Shanghai Composite fell 1.15% after pulling back from a 10-year high.

Bond yields across Europe also climbed, with Germany’s 10-year bund yield rising to 2.73% and the UK gilt yield up to 4.68%. The Bank of England left its policy rate unchanged at 4.00%, stressing that any cuts would be “gradual and careful.”

Intel dominated the session, alongside gains in KLA Corp, ASML, Applied Materials, Micron, and Marvell, all rising more than 5–6%. CrowdStrike jumped 12% after outlining its AI strategy, while biotech firm 89bio surged 85% following Roche’s $3.5 billion acquisition announcement.

On the downside, FactSet tumbled over 10% after issuing weaker-than-expected earnings guidance. ARM Holdings slid after Nvidia’s Intel investment news, while Darden Restaurants, Cracker Barrel, and Nucor also disappointed investors with weak forecasts.

The combination of Fed easing expectations and strong corporate catalysts continues to push US markets to new highs. However, rising bond yields and persistent inflation concerns suggest that volatility will remain a defining feature of the months ahead.