NEW YORK (Reuters) -Wall Street stocks followed European shares’ lead by moving sharply higher on Thursday, and benchmark Treasuries dipped as investors digested a delayed employment report and quarterly results from Nvidia, which allayed fears of an artificial intelligence bubble.
All three major U.S. stock indexes advanced, with solid gains in the Magnificent Seven group of AI-adjacent momentum stocks putting the tech-heavy Nasdaq out front. Benchmark Treasury yields dipped along with gold, providing further signs of market participants’ reawakened risk appetite.
Chipmaker and AI darling Nvidia posted its hotly anticipated results after Wednesday’s closing bell, delivering consensus-beating earnings and stronger-than-expected forward guidance, which soothed jitters over inflated valuations in the sector.
“Nvidia’s report is exactly what the market needed,” said Jake Dollarhide, CEO at Longbow Asset Management in Tulsa, Oklahoma. “The worries and wrangling over the concerns over an AI bubble have been greatly exaggerated. Nvidia’s earnings yesterday show the AI boom and trade could easily bleed into a Santa Claus rally as we potentially blast off into year-end.”
Employment data, unavailable throughout the longest-ever U.S. federal government shutdown, reported more jobs than expected, but a surprising uptick in the unemployment rate suggested a softening in labor market conditions.
But the September jobs report is stale, and as a result of the decision to combine the October and November reports, the U.S. Federal Reserve will have just one month of dated employment numbers to inform its rate decision at next month’s policy meeting.
Financial markets are pricing in a 43.8% likelihood that the central bank will implement its third interest rate cut of the year at the meeting, down from about 50% at the same time last week and near certainty a month ago, according to CME’s FedWatch tool.
But not everyone agrees.
“The Fed is going to have to go on its own guts, and from a contrarian viewpoint, I believe that they will cut by 25 basis points,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“The rhetoric that we’re hearing from a lot of Fed members is just playing it safe,” Cardillo added. “But I think the dovish members are probably going to win, and they are going to be right.”
NASDAQ LEADS WAY HIGHER
The Dow Jones Industrial Average rose 655.31 points, or 1.41%, to 46,789.96, the S&P 500 rose 118.35 points, or 1.77%, to 6,759.85 and the Nasdaq Composite rose 524.22 points, or 2.32%, to 23,088.45.
European shares rode the Nvidia wave, benefiting from a global relief rally.
MSCI’s gauge of stocks across the globe rose 14.33 points, or 1.47%, to 991.54.
The pan-European STOXX 600 index rose 1.11%, while Europe’s broad FTSEurofirst 300 index rose 25.05 points, or 1.12%.
Emerging market stocks rose 12.93 points, or 0.95%, to 1,373.24. MSCI’s broadest index of Asia-Pacific shares outside Japan closed higher by 1.07%, to 705.40, while Japan’s Nikkei rose 1,286.24 points, or 2.65%, to 49,823.94.
U.S. Treasury yields dropped after the U.S. unemployment rate unexpectedly edged up to 4.4%, raising the probability of further easing from the Fed before year-end.
The yield on benchmark U.S. 10-year notes fell 1.7 basis points to 4.114%, from 4.131% late on Wednesday.
The 30-year bond yield fell 1.4 basis points to 4.7378% from 4.752% late on Wednesday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Fed, fell 2.8 basis points to 3.571%, from 3.598% late on Wednesday.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.12% to 100.21, with the euro down 0.08% at $1.1526.
Against the Japanese yen, the dollar strengthened 0.43% to 157.82.
In cryptocurrencies, bitcoin gained 0.07% to $90,602.37. Ethereum declined 0.17% to $2,983.86.
Oil prices got a boost from a bigger-than-expected draw on U.S. crude stockpiles amid the tailwind of the broader equities rally.
U.S. crude rose 1.09% to $60.09 a barrel and Brent rose to $64.27 per barrel, up 1.2%.
Gold prices inched higher as investors assessed the delayed jobs report. Spot gold rose 0.2% to $4,088.99 an ounce. U.S. gold futures rose 0.31% to $4,090.40 an ounce.
(Reporting by Stephen Culp; Additional reporting by Caroline Valetkevitch in New York and Marc Jones in LondonEditing by Rod Nickel)
