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Dow rises 500 points as Fed-backed stocks target records

US stock prices rose on Thursday amid growing confidence that the Federal Reserve's massive interest rate cut would bring a “soft landing” to the US economy.

The S&P 500 (^GSPC) rose about 1.7%, while the Dow Jones Industrial Average (^IXIC) gained more than 500 points, both trading near record highs. The tech-heavy Nasdaq Composite (^IXIC) led the gains with a 2.2% gain.

Stocks are rising as investors take a closer look at the Fed's decision to begin its new interest rate cycle with a 50 basis point cut. Stocks fluctuated after Wednesday's policy announcement before closing in the red.

Wall Street has taken note of Chairman Jerome Powell's message that a deep cut in a relatively strong economy will ultimately avert the risk of recession – and that this is a sign of confidence and not panic in the current situation.

Bank of America now expects the Fed to cut interest rates by 0.75 percent by the end of the year. Previously, it had only forecast 0.50 percent. In comparison, the central bank's “dot plot” suggests that policymakers expect a cut of half a percentage point.

Read more: What the Fed's interest rate cut means for bank accounts, CDs, loans and credit cards

Rate-sensitive growth stocks rose in premarket trading, with the big technology stocks that fueled this year's rally making gains. Alphabet (GOOG), Microsoft (MSFT) and Meta (META) all gained about 2%, while Apple (AAPL) gained over 3%. Tesla (TSLA) and Nvidia (NVDA) rose about 4%.

With the Fed completing its course corrections, some market participants are again watching the data releases as they brace for potential volatility. A weekly report from the Labor Department on initial jobless claims on Thursday morning showed a decline to the lowest level in four months. The figure for the week ending September 19 was 219,000, while the previous week's total was revised up by 1,000 to 231,000.

Live3 updates

  • Existing home sales decline in August due to lower mortgage rates

    Existing home sales fell in August as homebuyers held off even though mortgage rates hit their lowest levels in over a year.

    Existing home sales fell 2.5 percent from July to a seasonally adjusted 3.86 million, the National Association of Realtors said Thursday, the lowest since October. Economists surveyed by Bloomberg expected existing home sales to reach a level of 3.9 million in August.

    On an annual basis, resale home sales fell 4.2% in August. The median home price rose 3.1% from August of last year to $416,700, the 14th consecutive month of annual price increases.

    The combination of tight inventory, rising prices and increased mortgage rates continues to slow sales activity – for now.

    “Home sales were disappointing again in August, but the recent trend of lower mortgage rates coupled with rising inventory is a powerful combination that will create the environment for increasing sales in the coming months,” NAR Chief Economist Lawrence Yun said in a press release.

    However, despite lower mortgage rates, Fannie Mae economists do not expect a turnaround in sales activity this year.

    We “expect existing home sales to decline to the lowest annual pace since 1995 in 2024,” they said.

  • Growth-hungry company Campbell's must prepare for a battle with private labels and well-known competitors

    Brooke DiPalma of Yahoo Finance reports:

    With products ranging from stuffing-flavored chips to chicken noodle soup with bhut jolokia and chili, the companies are increasing competition on supermarket shelves.

    While retailers like Walmart (WMT) and Target (TGT) are moving forward with private labels, Campbell's (CPB) is relying on innovation, marketing and expanded distribution to sell its famous brands like Goldfish.

    “It is important to create the right value that [is] not just based on price,” CEO Mark Clouse told Yahoo Finance at Campbell's investor day last week. “It's about how we can create value in a more differentiated and sustainable way.”

    Read more here.

  • Dow and S&P 500 hit record highs during the day as stocks soar after massive rate cut

    The Dow (^DJI) and S&P 500 (^GSPC) hit record highs on Thursday as investors digested the Federal Reserve's announcement during the previous meeting – a 50 basis point interest rate cut.

    The S&P 500 rose about 1.7%, while the Dow gained more than 1%, both hitting record highs. The tech-heavy Nasdaq Composite (^IXIC) led the gains, rising more than 2.3%.

    Following the Fed's decision to cut interest rates, major averages fluctuated during the previous session.

    Gold (CG=F) hovered near all-time highs. The precious metal and other commodities rose as the dollar fell

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