Stock market upward trend following Federal Reserve's hint at further interest rate reductions; Intel shares surge
In a day marked by mixed performances, the broader semiconductor index reached a new record high, advancing 3.3%. Key players such as Applied Materials, Lam Research, and Micron Tech recorded gains between 4.5% and 5.6%. However, Advanced Micro Devices slipped 3%.
The tech-heavy Nasdaq and S&P 500 technology sector also rose, with the Nasdaq recording a 1.2% increase. Nvidia, despite concerns about Chinese tech firms, managed to rise 2.3%. A significant boost came from Intel, which increased by 24.6% following Nvidia's announcement of a $5 billion investment.
The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite were up 0.36%, 0.63%, and 0.98%, respectively, at the given time. Yet, a decline in consumer discretionary stocks, including McDonald's and Amazon, limited gains on the Dow.
CrowdStrike gained 10.2% after at least nine brokerages raised their price target on the stock. On the other hand, Nucor slipped 3.5% after the steel company expected a decrease in third-quarter profit across all its three operating segments.
The labor market has softened, with both demand for and supply of workers diminishing. The Federal Reserve Chair, Jerome Powell, acknowledged this softening jobs market as a priority for the central bank.
The small-cap Russell 2000 index gained 1.5% and is on track for a record close. Investors are pricing in 42.8 basis points in cuts by end-2025. The S&P 500 has gained so far in September, bucking the historical trend of shedding 1.4% on average since 2000.
The ratio of advancing issues to decliners was 1.73-to-1 on the NYSE and 2.71-to-1 on the Nasdaq, indicating a positive sentiment. The S&P 500 posted 21 new 52-week highs and six new lows, while the Nasdaq Composite recorded 82 new highs and 22 new lows.
Keith Buchanan, senior portfolio manager at Globalt Investments, emphasised the need for less restrictive policy. The number of Americans filing new applications for unemployment benefits fell last week, offering a glimmer of hope for the recovering economy.
In the news, Nvidia announced a $5 billion investment in Intel's common stock as part of their new collaboration to jointly develop AI infrastructure and personal computing products. This announcement is expected to add to Wall Street's recent rally.
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