Wall Street Climbs as Fed Rate Cut Expected/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks rose again Thursday as hopes grow for an interest rate cut by the Federal Reserve. Mixed economic data, including weak labor indicators and steady inflation, supported market optimism. Major indexes like the S&P 500 are approaching record highs amid easing Treasury yields.
Wall Street Rallies on Fed Rate Cut Hopes – Quick Looks
- S&P 500 up 0.4%, nearing another all-time high
- Dow Jones gained 371 points, Nasdaq rose 0.4%
- Treasury yields dropped after mixed economic data
- Weekly jobless claims increased, hinting at labor market softening
- August inflation rose 2.9% YoY, in line with expectations
- Investors expect Fed to cut rates at upcoming meeting
- Centene jumped 12% after positive profit forecast
- Opendoor soared 48% with new CEO, $40M investment
- Kroger swung between gains and losses after earnings
- Oracle fell 3.8%, giving back recent AI-related gains
- European stocks rose after ECB held rates steady
- Asian markets were mixed: Shanghai up, Hong Kong down
Deep Look: Wall Street Rallies Toward Records as Fed Rate Cut Bets Grow
NEW YORK — U.S. stock markets climbed again Thursday morning, pushing the S&P 500 closer to a new record high as investors digested a mix of economic signals and bet that the Federal Reserve will lower interest rates soon to support a slowing economy.
The S&P 500 rose by 0.4%, following two consecutive record-setting days. The Dow Jones Industrial Average jumped 371 points, or 0.8%, and the Nasdaq Composite also gained 0.4% by mid-morning trading.
Behind the rally lies a growing expectation that the Fed will cut interest rates at its upcoming policy meeting next week, a move intended to stimulate economic growth by making borrowing cheaper for consumers and businesses. Market sentiment shifted further toward this outlook after fresh reports pointed to a cooling labor market and moderating inflation—precisely the combination that could tip the Fed toward easing.
Labor Market Softening Raises Fed Expectations
One key report showed an uptick in weekly jobless claims, suggesting that more Americans are being laid off. This marks another sign of strain in a job market that had been characterized by stability, with low levels of both hiring and firing.
Until recently, the labor market was described as entering a “low-hire, low-fire” equilibrium. But signs of increasing layoffs may pressure the Fed to respond before conditions worsen.
Wall Street is hoping for a “Goldilocks slowdown” — not so extreme as to spark a recession, but soft enough to convince the Fed to act. Rate cuts would boost investment valuations and inject more liquidity into the economy.
However, the Fed faces a delicate balancing act. President Donald Trump’s trade tariffs continue to pose inflationary risks, which has made the central bank cautious about loosening monetary policy too aggressively.
Inflation Matches Forecasts, Slightly Higher
The latest Consumer Price Index (CPI) report revealed that U.S. consumer prices rose 2.9% year-over-year in August, up slightly from 2.7% in July. While this remains above the Fed’s official 2% target, the increase was in line with economists’ expectations.
Gasoline, groceries, and other household costs continued rising, but not at a pace that alarmed markets. That’s why many investors still believe the Fed will prioritize supporting growth over combating inflation.
“Right now, inflation is a key subplot, but the labor market is still the main story,” said Ellen Zentner, Chief Economic Strategist at Morgan Stanley Wealth Management.
Wall Street Standouts: Winners and Losers
Several stocks made big moves Thursday:
- Centene Corp. led major gainers with a 12% surge after it reaffirmed its annual profit outlook through August—exceeding Wall Street’s expectations.
- Opendoor Technologies soared 48% after naming Shopify COO Kaz Nejatian as its new CEO and receiving a $40 million investment from its founders and affiliated firms.
- Kroger initially gained after beating earnings estimates, but the stock later dipped 0.1% as revenue fell slightly short of analyst forecasts. The grocery chain also raised the lower end of its annual profit guidance.
- Oracle shares dropped 3.8%, retreating after a record-setting 36% rally the previous day driven by AI-related contract announcements.
Global Markets and Bond Movements
Global markets also reacted positively to monetary policy developments. In Europe, stock indexes rose after the European Central Bank held its benchmark interest rates steady.
- France’s CAC 40 climbed 0.9%
- Germany’s DAX rose 0.2%
ECB President Christine Lagarde signaled that future rate moves are not on a predetermined path, aligning with the wait-and-see approach of the Fed.
Asian markets were more mixed:
- Shanghai Composite Index jumped 1.7%
- Hong Kong’s Hang Seng Index fell 0.4%
In the bond market, Treasury yields declined, reflecting investor expectations for softer economic growth and easier monetary policy. The yield on the 10-year Treasury note fell to 4.01% from 4.04% the previous day.
Looking Ahead: All Eyes on the Fed
With inflation data holding steady and the labor market cooling, the focus now turns squarely to the Federal Reserve’s policy meeting next week. Markets are betting that the central bank will finally take a dovish turn, cutting rates for the first time this year to support a fragile recovery.
Investors remain optimistic that the Fed can walk a fine line: stimulating growth without reigniting inflation.
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