4 Key Indicators on Wall Street Reach Record Levels After Interest Rate Cut

SadaNews Economy - Four major U.S. stock indices soared to all-time highs in perfect harmony yesterday, Thursday, as risk appetite dominated Wall Street after the Federal Reserve announced its first interest rate cut of the year, hinting at more actions to come in the future.

The "Russell 2000" index for small companies jumped by 2.5%, marking its first record close since November 2021, joining its larger peers. The "S&P 500" rose by 0.48% in New York, while the tech-dominated "NASDAQ 100" increased by 0.95%, and the "Dow Jones Industrial" rose by 0.27% - all achieving new milestones concurrently.

Data compiled by Bloomberg shows that this synchronization among record highs is rare, occurring only on 25 days during this century.

U.S. central bank officials cut interest rates by a quarter percentage point on Wednesday, anticipating two more cuts this year.

Federal Reserve Chairman Jerome Powell noted increasing signs of weakness in the labor market after borrowing costs remained stable since December due to inflation concerns driven by tariffs.

David Maza, CEO of Round Hill Financial, stated, "While this cut may be limited to managing risks, it was enough to spur traders to push stocks higher, especially after the Federal Reserve indicated the possibility of further action."

Maza added, "What is truly rare is that this rally has pushed all four major indicators to new record levels, and the interest rate cut finally sparked action in small-cap companies, a part of the market that has lagged for years."

The "Russell 2000" index, which includes some of the riskiest and most debt-laden companies in the market, recorded its first record close in nearly four years, ending the longest period without a record since the collapse of the dot-com bubble.

Small Companies Catch Up

Matt Maley, chief market strategist at Miller Tabak, said that breaking through the small-cap index's main resistance level "will be critical for the stock market moving forward."

The gains in U.S. stocks on Thursday mark a retreat from traders' initial reaction to the Federal Reserve's decision in the previous session, which saw Wall Street book gains from high-performing tech stocks.

Robert Shain, Chief Investment Officer at Blank Shain Wealth Management, said in an email: "The Federal Reserve is cutting interest rates at a time when stocks are hitting record highs and the economy is still growing, which is a unique backdrop, as rate cuts are usually associated with an economy facing troubles." He added that "this dynamic boosts stock performance."

Initial jobless claims in the United States fell by the largest amount in nearly four years, reflecting a large unusual jump in the previous week, and aligning with a decline in layoffs across the economy.

Jobless claims dropped by 33,000 to 231,000 claims in the week ending September 13, according to data released by the Department of Labor on Thursday.

Billion-Dollar Investments by NVIDIA

In corporate news, NVIDIA agreed to invest $5 billion in Intel, stating that the two will collaborate on developing chips for computers and data centers, in a surprising move to support its struggling rival. Intel shares rose by 23%.

Meanwhile, Live Nation Entertainment and its subsidiary Ticketmaster are facing a lawsuit from the U.S. Federal Trade Commission and seven states for failing to curb the use of automated ticket bots and widespread reselling.

In another context, Micron Technology continued its gains for the twelfth consecutive session, setting a record before the quarterly earnings update from the memory chip manufacturer next week.

The stock of Cracker Barrel Old Country Store dropped after the annual revenue forecast for the restaurant chain fell below expectations.