Fed Rate-Cut Hopes Drive S&P 500 to Record High Amid Market Rally

The Federal Reserve dominated market sentiment Thursday as growing expectations of interest rate cuts propelled the S&P 500 to a record close.

All major U.S. indexes surged nearly 1%, with the Nasdaq leading gains on strong buying in tech, financial, and housing-related sectors. The rally broke a three-day losing streak for the Dow Jones Industrial Average, which jumped 350 points to 45,621.29—just 16 points shy of its all-time high. The S&P 500 climbed 0.8% to close at 6,502.08.

Driving the optimism were weaker-than-expected labor market indicators, which bolstered the view that the Fed could ease monetary policy at its upcoming meeting on Sept. 16–17. Thursday’s ADP private-payrolls report showed just 54,000 jobs added in August, well below forecasts. Weekly jobless claims also came in slightly above expectations at 237,000. Treasury yields edged lower following the data, with the 10-year yield falling 0.035 percentage point to 4.176%.

“Everyone’s expecting the Fed to cut rates, and that’s a major tailwind for housing,” said Christopher O’Keefe, portfolio manager at Logan Capital Management. Home-related stocks rallied: Williams-Sonoma and Builders FirstSource each jumped more than 5%.

Tech stocks surged on continued enthusiasm around artificial intelligence. Western Digital gained around 5%, boosted by demand for data center hardware. Amazon rose 4.3% after landing its first airline customer for its satellite internet division.

Meanwhile, President Trump’s efforts to exert more influence over the Federal Reserve advanced as the Senate held a confirmation hearing for Stephen Miran, a Trump ally nominated for a Fed governor seat. Miran told the Senate Banking Committee he would act independently if confirmed, aligning with the Fed’s tradition.

Committee Chair Sen. Tim Scott did not address Trump’s push to remove Fed Governor Lisa Cook. The Justice Department is reportedly investigating Cook following Trump’s accusations of mortgage fraud, and the White House hopes to confirm Miran before the Fed’s next meeting.

Sen. Mike Rounds (R., S.D.) expressed surprise that Miran intends to keep his current White House role while serving a short term at the Fed, but signaled it wouldn’t derail his support.

Republican lawmakers now face a balancing act—supporting Fed independence without alienating Trump.

Elsewhere, commodity markets were mixed. Brent crude oil fell nearly 1% to $66.99 per barrel, while gold retreated slightly from record highs, but remained near $3,600 per troy ounce.

In Asia, Chinese equities fell following a recent rally that some analysts say could trigger regulatory scrutiny aimed at curbing speculative activity. Separately, the Nasdaq is reportedly moving to tighten listing rules for small Chinese firms.