Stocks surge to new peaks fueled by anticipation of Federal Reserve interest rate reduction
In a day of mixed signals, major indices in the US stock market today reached new record highs, while several stocks faced challenges.
The S&P 500 Index, Dow Jones Industrials Index, and Nasdaq 100 Index all posted impressive gains on Thursday, with the S&P 500 closing at an all-time high. This uptrend was driven by strong performances from tech companies, with Nvidia (NVDA) and Micron Technology (MU) closing up more than +3% and +5% respectively. Marvell Technology (MRVL) and CrowdStrike Home (CRWD) also saw significant gains, closing up more than +5% and +12% respectively.
However, not all sectors were rosy. The 10-year T-note yield rose by +1.4 bp to 4.101% on Thursday, indicating a slight increase in investor anxiety. This trend was reflected in the performance of some tech stocks, with ARM Holdings (ARM) closing down more than -4% due to Nvidia's investment in Intel.
The markets are pricing in a 94% chance of a -25 bp rate cut at the next FOMC meeting on Oct 28-29, a move aimed at stabilising the economy amid ongoing uncertainties.
The economic outlook, however, showed some concerning signs. August leading indicators fell -0.5% m/m, marking the biggest decline in four months. The Sep Philadelphia Fed business outlook survey rose by +23.5 to an 8-month high of 23.2, but this was not enough to offset the negative lead indicators.
Some companies also faced challenges. FactSet Research Systems (FDS) closed down more than -10% due to lower Q4 earnings and a weak 2026 forecast. Darden Restaurants (DRI) forecasted a lower 2026 adjusted EPS, and Cracker Barrel Old Country Store (CBRL) forecasted weaker 2025 revenue.
In the financial sector, Allstate (ALL) saw a rise of more than +4% due to lower August catastrophe losses. CSX Corp (CSX) was upgraded to outperform by RBC Capital Markets, while AeroVironment (AVAV) saw a boost due to positive coverage from Bank of America.
The markets also saw some significant movements in the semiconductor sector. Intel (INTC) surged more than +22% after Nvidia agreed to invest $5 billion in the company and said the two will codevelop chips for PCs and data centers. ON Semiconductor (ON) and Lam Research (LRCX) also closed up more than +4%.
Looking ahead, C&F Financial Corp (CFFI), Louisiana-Pacific Corp (LPX), and Pathward Financial Inc (CASH) are scheduled to release their earnings reports.
In the broader market, weekly initial unemployment claims fell by -33,000 to 231,000, a positive sign for the labour market. However, the December 10-year T-notes closed down by -4.5 ticks on Thursday, indicating a slight increase in investor anxiety.
The European Central Bank (ECB) is also expected to take a cautious stance during its meeting on October 30, 2025, with the markets anticipating a -25 basis points rate cut.
In legal news, Live Nation Entertainment (LYV) faced a setback with a legal action by the US Federal Trade Commission.
Red Cat (RCAT) also saw a drop of more than -10% due to an intended public offering of common stock.
As the market continues to navigate through uncertainties, investors will be closely watching these developments to guide their investment decisions.
