Key Takeaways
- S&P 500 surges 1.8% in one of Wall Street’s best days since summer
- Nvidia’s strong earnings ease AI bubble fears, stock gains 3.9%
- Mixed jobs data keeps hopes alive for potential Fed rate cuts
- Walmart jumps 5.5% after beating earnings expectations
Wall Street experienced a major rally on Thursday, with the S&P 500 climbing 1.8% for one of its strongest performances since May. The surge came as Nvidia’s impressive profit report reassured investors about AI stocks and mixed employment data maintained hopes for Federal Reserve rate cuts.
Market Performance Highlights
The Dow Jones Industrial Average jumped 675 points (1.5%) by mid-morning trading, while the Nasdaq composite led gains with a 2.3% increase. This marked a significant turnaround after weeks of market uncertainty driven by concerns about overvalued AI stocks and potential Fed policy tightening.
Nvidia Powers AI Stock Revival
Nvidia reported summer profits that exceeded analyst expectations and provided strong revenue forecasts, easing fears of an AI bubble. The chipmaker’s stock rose 3.9%, recovering from monthly losses that had briefly exceeded 10%. As the most valuable US company, Nvidia’s performance heavily influences the S&P 500 index.
“It is very hard to see how this stock does not keep moving higher from here,” according to analysts at UBS led by Timothy Arcuri. They added that “the AI infrastructure tide is still rising so fast that all boats will be lifted.”
The positive sentiment spread across AI-related companies, with Palantir Technologies rising 3.3% and Broadcom gaining 4.8%.
Jobs Data Fuels Rate Cut Hopes
Thursday’s employment report provided mixed signals that financial markets interpreted positively. While hiring exceeded expectations in September, the unemployment rate showed a slight deterioration. According to Seema Shah, chief global strategist at Principal Asset Management, this combination could encourage the Fed to consider rate cuts.
Traders now see a 44% probability of a December rate cut, up from 30% a day earlier, based on CME Group data. The Fed’s decisions remain crucial as previous market records were partly driven by expectations of continued rate reductions.
Walmart Outperforms Expectations
Walmart surged 5.5% after reporting strong quarterly sales and profits that surpassed Wall Street forecasts. The retail giant continues to attract budget-conscious Americans concerned about economic pressures and rising prices. Unlike competitors reducing projections, Walmart raised its financial outlook following a robust third quarter, positioning itself for a strong holiday season.
Global and Bond Market Movements
In the bond market, the 10-year Treasury yield eased to 4.11% from 4.13%. International markets also rallied, with Japan’s Nikkei 225 jumping 2.6% and South Korea’s Kospi rising 1.9%. European and Asian indexes broadly showed positive momentum.
