Wall Street rebounded on Thursday after three days of losses, as traders anticipate no interest rate adjustments at the Federal Reserve meeting next week.
The anticipation is high ahead of the release of the latest U.S. jobs report on Friday. The Fed hopes that the job market will show signs of slowing down, but not too much. A slowdown that is too weak could lead to a recession, while a slowdown that is too strong could cause inflation to rise.
Traders have repeatedly misjudged the Fed's rate hike timeline, expecting pauses or cuts that have never materialized since it began its tightening policy early last year. While the Fed hints at a possible peak, rate cuts remain an uncertainty.
The S&P 500 has been climbing steadily since late October, fueled by hopes of an early Fed rate cut in March. On Thursday, it rose another 36.25 points or 0.8 percent, remaining near its highest level since March 2022.
The Nasdaq Composite surged 1.37 percent, reaching 14,339.99 points, while the Dow Jones Industrial Average gained a modest 0.18 percent, closing at 36,117.57 points.
Outpacing all others in the S&P 500, Tesla dominated trading with a staggering $25.7 billion worth of shares changing hands, recording a 1.37 percent rise.
Big Tech stocks spearheaded a market rally, fueled by a 5.3 percent jump in Google's parent company, Alphabet, and a near 10 percent rise in Advanced Micro Devices (AMD). Fresh optimism about artificial intelligence from both companies drove their impressive gains, with analysts praising Alphabet's newest AI model and AMD estimating a potential $45 billion market for its data center AI chips this year.
Joining the rally, other tech giants saw their stocks rise significantly. Nvidia and Meta Platforms surged over 2 percent, while Amazon and Apple climbed 1.6 percent and 1 percent, respectively.
The Philadelphia Semiconductor Index (SOX) surged 2.8 percent, boosting its year-to-date gain to 48 percent. This strong performance was largely driven by optimism surrounding the future of artificial intelligence (AI) and its potential impact on the semiconductor industry.
Cerevel Therapeutics edged up 11.4 percent following AbbVie's announcement of an $8.7 billion acquisition deal. The deal covers the company and its promising pipeline of candidates for schizophrenia, Parkinson's and other diseases. Meanwhile, AbbVie's stock saw a modest 1.1 percent increase.
At the end of the day, trading volume on U.S. exchanges was relatively heavy on Thursday. Around 11.2 billion shares changed hands, exceeding the average daily volume of 10.8 billion shares seen over the past 20 sessions.
Other updates from the market
In other news, despite a slight increase in initial jobless claims reported Thursday, Treasury yields remained relatively stable. However, investors remain cautious and await the potentially more impactful jobs report scheduled for Friday, which could significantly influence market behavior.
The 10-year Treasury yield rose slightly to 4.14 percent on Thursday from 4.12 percent the previous day. This marks a significant decrease from its peak of 5 percent in October, which was the highest level seen since 2007.
The falling 10-year Treasury yield, including after accounting for inflation, has contributed to the S&P 500's nearly 9 percent surge in November. Goldman Sachs strategists believe this puts the index "roughly in line with its fair value," fueled further by expectations of a strong economy.
While traders anticipate significant rate cuts, Goldman Sachs warns they may be pushing the limits of what is feasible without triggering a near-term recession.
"We believe much of the optimistic scenario is already reflected in U.S. equity prices today," the strategists firm wrote in a report.
In contrast to rising U.S. yields, crude oil prices have been steadily declining due to concerns about weakening global demand falling short of current supply.
The price of a barrel of benchmark U.S. crude experienced another drop of 4 cents, settling at $69.34, down significantly from its peak of $93 in late September. Similarly, Brent crude, the international standard, dipped 25 cents to close at $74.05 per barrel.