US equity markets surged after the Federal Reserve delivered a quarter-point rate cut and signaled that additional rate reductions may be on the way. The move boosted investor optimism, pushing the S&P 500, Nasdaq, and Dow Jones to intraday record highs.
One of the standout stories was Intel, which rose roughly 29% — its largest one-day gain since October 1987 — after Nvidia announced a $5 billion investment in the company. Other semiconductor stocks also rallied strongly, helping the semiconductor index reach fresh highs.
The technology sector broadly benefited. Nvidia itself climbed 3.4%, bouncing back from previous concerns around its export business to China. Meanwhile, smaller-cap equities, represented by the Russell 2000, advanced as investors interpreted the Fed’s dovish stance as favorable for growth and risk assets.
On the macro side, the decision to cut interest rates reflects the Fed’s concern about a slowing jobs market. Although weekly unemployment claims fell, broader indicators suggest labor demand is softening. Still, there are no clear signs of an imminent recession.
Investors are currently pricing in roughly 43 basis points of additional rate cuts by the end of 2025. This expectation, combined with strong momentum in tech, especially in AI-linked and chip-related stocks, is fueling the rally. But the key question is how much of this “good news” is already baked in — and what could derail it if data disappoints.