S&P 500 and Nasdaq close at record levels, continuing post-election rally as Fed cuts interest rates

The S&P 500 and Nasdaq rose on Thursday, extending Wall Street's rally following President-elect Donald Trump's victory, as traders weighed the Federal Reserve's latest interest rate cut.

The S&P 500 gained 0.74% to close at a record high of 5,973.10. The Nasdaq Composite rose 1.51% to 19,269.46 – its first close above 19,000. The Dow Jones Industrial Average was little changed, falling less than a point to 43,729.34. All three indices hit intraday record highs during the session.

The moves followed a rise in stocks on Wednesday following Trump's victory, which included a 1,500-point rise in the Dow Jones. The S&P 500 rose 2.53%, marking its best post-election day in history.

The bond market has also been volatile since the election, with Treasury yields falling on Thursday after hitting a peak in the previous session.

These big swings formed the backdrop for the Federal Reserve's interest rate cut on Thursday afternoon. The central bank's quarter-point interest rate cut was widely expected, but was smaller than the half-percentage-point cut in September.

Fed Chairman Jerome Powell said the central bank was “well pleased with the state of the economy” and that the Fed would likely continue taking small steps in the future.

“The balance of risks gives the Fed sufficient leeway to cut interest rates well into 2025. Markets shouldn't expect outsized rate cuts unless the economy turns south and (that) doesn't seem likely at all for a while,” said Jamie Cox, managing partner at Harris Financial Group.

Wall Street generally expects the second Trump administration to benefit risk assets like stocks, thanks in part to his proposed tax cuts. However, the prospect of persistently large government deficits and higher tariffs has raised some concerns about a rebound in inflation.

Until the extent and impact of Trump's plans become clear, investors can expect volatile trading and a generally rising stock market, said Tony Roth, CIO at Wilmington Trust.

“At some point, given the high valuation multiples in stocks and the higher yields in bonds, we could have a very low risk premium for stocks and few opportunities left in the stock market. We're not there yet. I think we have six months before we have to seriously talk about whether we will be there,” Roth said.

Shares of major technology companies rose on Thursday to support the market, with Apple and Nvidia rising 2.1% and 2.3%, respectively. Metaplatforms rose 3.4%.

Financial stocks, which rose sharply on Wednesday, gave up some of those gains on Thursday. Shares of JPMorgan Chase fell 4.3% and American Express fell 2.8%, weighing on the Dow.