Joey Solitro
Stocks jumped out of the gate Thursday and never looked back as investors belatedly cheered the Federal Reserve's jumbo-sized rate cut from the day before.
At the closing bell, the Dow Jones Industrial Average was up 1.3% at 42,025 and the S&P 500 had gained 1.7% to 5,713 – new record closes. The Nasdaq Composite, meanwhile, rose 2.5% to 18,013, but remains about 3% off of its all-time closing high of 18,647.45 from mid-July.
The Fed caught most of Wall Street off-guard Wednesday when it lowered the federal funds rate by a half-percentage point – more than the quarter-percentage point many folks were anticipating.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Concerns that this was done because the economy is worse off than we think sparked a late-day reversal for stocks yesterday. However, these worries were quickly brushed aside today thanks in part to an encouraging update on the labor market.
Specifically, the Labor Department said this morning that initial jobless claims fell by 12,000 last week to 219,000.
Existing home sales slide in August
Elsewhere on the economic calendar, data from the National Association of Realtors showed existing home sales declined 2.5% in August from the month prior, to a seasonally adjusted annual rate of 3.86 million. Year-over-year, sales were down 4.2%.
"Despite the overall economy holding up, the interest-sensitive housing market continues to take a beating," says Priscilla Thiagamoorthy, senior economist at BMO Capital Markets. "While mortgage rates are now well below the near 8%-peak, many potential buyers remain reluctant to make a purchase until costs come down further amid the poorest affordability in decades."
Darden pops on Uber delivery deal
In single-stock news, Darden Restaurants (DRI) stock rallied 8.3% after the Olive Garden parent announced a new food delivery partnership with Uber Technologies (UBER, +2.4%). This helped offset the company's top- and bottom-line fiscal Q1 earnings miss.
"We like DRI's partnership with UBER to introduce on-demand delivery, with Olive Garden as the first pilot to expand its reach and exposure to its customers," says CFRA Research analyst Shreya Gheewala. However, she maintained a Hold rating on the consumer discretionary stock amid expectations for "limited upside potential for DRI given ongoing macroeconomic headwinds and inflationary pressures."
Alibaba rises after releasing open-source AI models
Alibaba Holdings (BABA) stock increased 4.8% after the Chinese e-commerce giant announced the release of more than 100 AI models and a new text-to-video tool.
Today's gains extend BABA's rally, with shares up 23% since late June. And Jefferies analyst Thomas Chong (Buy) thinks there's more room to run.
"Alibaba has multiple growth drivers in the years ahead, in our view, with its core marketplace a strong cash cow that enjoys secular growth momentum amid consumption upgrade in China, thanks to solid execution and technological strength in digitalizing the retail sector with enhanced efficiencies," he wrote in a note to clients.
AMD stock has its best day in six months
Amazon.com (AMZN) stock rose 1.9% after the e-commerce powerhouse announced a pay hike for front-line workers and the inclusion of Amazon Prime as a benefit. However, the rise in the Dow Jones stock was more likely associated with overall optimism in the market surrounding the Fed's rate cut announcement.
The excitement surrounding the Fed certainly fueled upside for several stocks, including a number of chipmakers. Advanced Micro Devices (AMD), for one, surged 5.7% – its best day since February 29, according to Dow Jones Market Data.
The semiconductor stock is up more than 50% in the past 12 months and Wall Street sees even bigger gains ahead. According to S&P Global Market Intelligence, analysts' average price target of $186.91 represents implied upside of nearly 20% to current levels. Plus, the consensus recommendation is Buy, and with strong conviction.
Related content
- New Phones Get All the Hype, but Consumers Still Love Old Models
- How Interest Rates Impact Stock Prices
- Should We Worry About the Slowing U.S. Economy
-
Social Security Wage Base Rises Again for 2026: Who Pays More Tax?Payroll Taxes The Social Security Administration has announced significant changes affecting millions as we approach a new year.
-
Quiz: How Well Do You Understand the Social Security Earnings Test?Quiz Test your basic knowledge of the Social Security earnings test in our quick quiz.
-
Targa Resources, Take-Two Interactive, Boston Scientific: Why Experts Rate These Stocks at Strong BuyWall Street is highly bullish on these three high-quality stocks.
-
Debunking Three Myths About Defined Outcome ETFs (aka Buffered ETFs)Defined outcome ETFs offer a middle ground between traditional equity and fixed-income investments, helping provide downside protection and upside participation.
-
This Is Why Judge Judy Says Details Are Important in Contracts: This Contract Had HolesA couple's disastrous experience with reclaimed wood flooring led to safety hazards and a lesson in the critical importance of detailed contracts.
-
US-China Trade Hopes Send Stocks to New Highs: Stock Market TodayApple and Microsoft are on track to join Nvidia in the $4 trillion market cap club.
-
A Lesson From the School of Rock (and a Financial Adviser) as the Markets Go Around and AroundIt's hard to hold your nerve during a downturn, but next time the markets take a tumble, remember this quick rock 'n' roll tutorial and aim to stay invested.
-
I'm a Financial Pro: This Is How You Can Guide Your Heirs Through the Great Wealth TransferFocus on creating a clear estate plan, communicating your wishes early to avoid family conflict, leaving an ethical will with your values and wisdom and preparing them practically and emotionally.
-
To Reap the Full Benefits of Tax-Loss Harvesting, Consider This Investment Strategist's StepsTax-loss harvesting can offer more advantages for investors than tax relief. Over the long term, it can potentially help you maintain a robust portfolio and build wealth.
-
Social Security Wisdom From a Financial Adviser Receiving Benefits HimselfYou don't know what you don't know, and with Social Security, that can be a costly problem for retirees — one that can last a lifetime.
