U.S. equity markets surged a day after the U.S. Federal Reserve lowered interest rates by 50-basis points, with the blue-chip Dow Jones Industrial Average and benchmark S&P 500 each closing at all-time highs.
The Dow rose 512 points, or 1.2%, and closed above 42,000 for the first time in its history. The S&P 500 rose 1.7%, and finished trading above 5,700 for the very first time. The Nasdaq Composite index that is heavily weighted with technology stocks rose 440 points, or 2.6%, on the day.
A Return to Riskier Assets
Stocks were given a boost by economic data that suggests the U.S. central bank might be engineering a soft landing for the economy, as the latest weekly jobless claims declined by 12,000 positions to 219,000, which was below estimates.
While the Dow and S&P 500 closed at record highs, it was technology stocks that led the rally as the Fed’s interest rate cut prompted investors to return to a riskier assets. Shares of companies associated with artificial intelligence (AI), such as Nvidia (NVDA) and Advanced Micro Devices (AMD) posted some of the biggest gains, rising 5% and 7%, respectively.
Cryptocurrencies also jumped sharply higher on the day, with the price of Bitcoin (BTC) increasing 5% to $63,200, its highest level in months. The Federal Reserve’s benchmark overnight lending rate now sits in a range of 4.75% to 5%.
Is SPY a Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on the SPDR S&P 500 ETF Trust based on 405 Buys, 93 Holds, and six Sells assigned in the last three months. After a 21% year-to-date rally, the average SPY price target of $630.62 per share implies 10.45% upside potential moving forward.
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