Stocks Rebound as Rate-Cut Hopes Lift Major Averages to Fresh Highs

The market shrugged off an early slide on Thursday, with broad-based strength and renewed confidence in a September rate cut pushing the major averages higher through the session.

The S&P 500 gained 0.8% and closed at a new record high of 6,502.08, while the Nasdaq Composite rallied 1.0% and the Dow Jones Industrial Average rose 0.8%. Unlike yesterday’s tech-led move, today’s advance was more evenly spread, giving the rally a healthier look.

Smaller-cap names joined in as well. The S&P Mid Cap 400 jumped 1.5% and the Russell 2000 added 1.3%, a sign that improving rate expectations are starting to lift more economically sensitive corners of the market.

A heavy slate of economic data kept monetary policy firmly in focus. August’s ADP Employment Change report came in softer than expected at 54,000 (consensus 69,000), and the ISM Services Index showed an uptick in activity at 52.0 but still flagged weakness in hiring, with the employment subindex remaining in contraction for a third straight month.

New York Fed President John Williams added to the dovish tone, noting that interest rates are likely to move closer to neutral as the labor market gradually cools. Together, the data and commentary drove the implied probability of a 25-basis point cut at the September FOMC meeting to 97.4%, according to the CME FedWatch tool.

Mega-cap stocks continued to play a big role in the rally, with the Vanguard Mega Cap Growth ETF climbing 0.9%. Even so, participation was wide, as the equal-weighted S&P 500 rose 0.7% and 10 of 11 sectors finished in the green. Utilities were the lone laggard, slipping 0.2%.

Consumer discretionary stocks led the charge with a 2.3% gain, thanks to Amazon’s 4.3% jump. Retail names were another bright spot — American Eagle soared nearly 38% after a strong earnings beat, helping the SPDR S&P Retail ETF climb 2.6%. Homebuilders also rode the wave, with the iShares U.S. Home Construction ETF rising 3.0%.

Communication services gained 1.1%, extending its weekly advance to 4.5% as Meta Platforms and Netflix both moved higher, while Alphabet added modestly after yesterday’s surge.

Despite the upbeat action, trading volume was below average, suggesting that while rate-cut optimism is driving markets higher, some investors remain cautious ahead of key catalysts still to come.

Here’s a daily-style review for FTinvest 11 based on your provided numbers:

Our model portfolio FTinvest 11 had an impressive showing today, powering through resistance and finishing at a new all-time closing high. The index rose 1.12% to end the session at 853.48, cementing its place deeper in record territory.

The strong advance was driven by steady gains of two components throughout the session, with the index never falling back into negative territory. Buying interest broadened as the day progressed, suggesting a renewed appetite for risk and a willingness among investors to push past previous highs.

Today’s move builds on recent momentum and puts FTInvest 11 within striking distance of extending its record streak further if positive sentiment carries into the next session.