NEW YORK — U.S. stock indexes opened at intraday record highs Thursday as futures climbed on renewed optimism that the Federal Reserve will begin cutting interest rates later this year, allowing investors to set aside concerns about a partial government shutdown and a sparse economic calendar.
The S&P 500 hit an intraday record of 6,731.94 and the Nasdaq Composite reached 22,900.60 earlier in the session, driven by strength in technology and semiconductor shares. At the New York open, indexes remained near those peaks as traders priced growing odds of monetary easing.
Rate-cut expectations underpin rally
Market participants have increasingly anchored bets on weaker policy in the face of softer labor data and reduced economic reporting caused by the shutdown. With weekly jobless claims and other routine government releases delayed or curtailed, investors are relying more heavily on private employment indicators and Fed commentary to set expectations.
“I think they will look at the fact that the trend in the jobs market continues to be weak, which is one of their mandates that they’re trying to defend right now,” said Art Hogan, chief market strategist at B. Riley Wealth, underscoring why markets are pricing in easier policy.
The prospect of lower rates has pushed yields down and boosted valuations for growth stocks, particularly companies sensitive to interest rates.
Tech and semiconductors lead gains
Technology names were among the biggest contributors to the advance. Chipmakers and related suppliers rallied on reports of industry demand and speculative M&A chatter, lifting the broader semiconductor index to a record high and buoying the Nasdaq.
Nvidia, Broadcom and Advanced Micro Devices posted notable gains early in the session, while industrial names such as Caterpillar also traded at record or multiyear highs on signs of sustained corporate demand.
With traders anticipating a more accommodative Federal Reserve, equities that stand to benefit from lower discount rates have enjoyed outsized returns, analysts said.
Shutdown, data gaps and market risk
Still, the backdrop is not without risk. A prolonged U.S. government shutdown could create a data vacuum that leaves markets more vulnerable to mispricing, and would delay important reports the Fed uses to assess the economy. Officials at the central bank have repeatedly said they monitor a broad set of indicators in deciding policy.
For context on the Fed’s mandate and tools, investors often consult the central bank’s official communications. See the Federal Reserve’s statements on monetary policy for the latest guidance: Federal Reserve.
Labor market readings will be especially important once regular reporting resumes. The U.S. jobs data series compiled by the Bureau of Labor Statistics is a key Fed reference; readers can find official labor statistics at the Bureau of Labor Statistics.
Market breadth and international response
Advancers outnumbered decliners on U.S. exchanges, and the session produced numerous 52-week highs across key indices, indicating broad participation. European markets also rose, rallying on the same dovish tone as global central banks signaled less hawkish policy stances.
Short-term bond yields moved lower as traders increased the probability of a 25-basis-point cut at an upcoming Fed meeting, compressing the curve and encouraging flows into equities and other risk assets.
What investors will watch next
Looking ahead, traders will monitor any fresh comments from Fed officials and the pace and duration of the government shutdown. When government data resumes, payrolls and inflation readings will be watched closely for signs that could either reinforce or reverse current market pricing.
Investors should weigh the near-term relief priced into markets against the still-present risks of fiscal disruption and potential policy missteps. Until more hard data returns, markets may remain sensitive to central bank rhetoric and private reports that signal shifting economic momentum.
