U.S. stocks surged on Thursday as investors assessed the Federal Reserve’s unexpectedly dovish stance on interest rates, alongside a mix of earnings and economic reports. All three major indexes closed in positive territory, with the Nasdaq leading the gains by advancing 1.5%, largely driven by a boost from chip stocks following Qualcomm’s better-than-expected quarterly sales and profit.
Investors continued to digest Fed Chair Jerome Powell’s remarks from Wednesday, emphasizing the central bank’s inclination toward lowering its key policy rate in the future. However, Powell also acknowledged recent strong inflation readings, suggesting that rate cuts might not occur immediately.
“The Fed’s bias remains toward holding rates steady or cutting them,” said Paul Nolte, a senior wealth advisor and market strategist. “They’re poised to react to any signs of economic weakness or lower inflation by cutting rates.”
Thursday’s data included subdued jobless claims, a decline in planned layoffs, a surge in quarterly labor costs, and a significant slowdown in productivity growth, setting the stage for Friday’s highly anticipated April employment report.
Despite earlier expectations for more rate cuts, the data hasn’t supported such actions, noted Joseph Sroka, chief investment officer at NovaPoint. The OECD’s upgraded global growth outlook, partly driven by the resilience of the U.S. economy, also contributed to market optimism.
Of the S&P 500 companies reporting earnings, 77% have exceeded expectations. However, stocks reacting to earnings surprises have seen less significant movements compared to previous quarters.
In individual stock movements, Qualcomm rose 9.8% after beating earnings estimates, while Carvana surged 33.8% on a positive profit outlook. Conversely, DoorDash fell 10.3% due to disappointing profit guidance, and Etsy dropped 15.0% after missing Wall Street expectations.
Peloton declined 2.5% following the resignation of its CEO and announced job cuts. The Dow Jones Industrial Average rose 0.85%, the S&P 500 gained 0.91%, and the Nasdaq Composite added 1.51%.
Advancing issues outnumbered decliners on both the NYSE and Nasdaq. The S&P 500 recorded 15 new 52-week highs and eight new lows, while the Nasdaq Composite saw 59 new highs and 89 new lows. Trading volume on U.S. exchanges was 11.19 billion shares.
