Wall Street took a day off from worrying about interest rates and went back to the trade it knows best. Chipmakers, the megacap platforms, even the data-storage names — all of it bid. The S&P 500 rose 1.14% to 7,637.76 and the Nasdaq Composite 1.69% to 26,418.30, the best single sessions either has had since Aug. 4. The Dow added 316 points, or 0.61%.
The context matters more than the number. Stocks had fallen in seven of the previous eight sessions, and on Wednesday the Federal Reserve raised its benchmark rate for the first time in three years. Thursday was the session in which investors decided they could live with that.
What actually moved
The leadership was unambiguous and it was high-beta. The PHLX Semiconductor index rose 3.14%. Advanced Micro Devices (AMD) gained 6.4% to $545.09, Sandisk 6.2%, Micron Technology (MU) 5.5% to $977.50, Marvell Technology (MRVL) 4.8%. Intel (INTC) closed at $108.80, up 7.7%, on more than 147 million shares. Every one of the seven megacap technology names — Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA) — rose at least 1.3%.
Two other things went right at the same time. Oil fell for a second straight session, which took pressure off bonds; the 10-year Treasury yield slipped to 4.946% from 5.003%, back under a line it had crossed for the first time since 2007. And the volatility index closed at 15.44, down 12.8% on the day.
“This is really a good relief rally,” said Mary Ann Bartels, chief investment strategist at Sanctuary Wealth, in the Journal’s account. “My sense is that even if the Fed raises one more time, the earnings are strong enough and the valuations aren’t stretched enough to really take the market down a lot.” David Stubbs of AlphaCore Wealth Advisory put the mood more plainly: “There’s a sense of relief of just knowing what actually we’re dealing with by now.”
The reading that did not join in
Underneath a 1% up day, the internals were mostly good and one of them was not. Advancing issues beat decliners 3,312 to 1,582, and the closing Arms index — a measure that compares advancing and declining issues against the volume behind each — came in at 0.59. Below one means buying demand. That is a broad day, not a narrow one.
And yet new 52-week lows outnumbered new highs, 151 to 99. On a session when three major averages rose and two-thirds of issues advanced, more stocks made a fresh one-year low than a fresh one-year high. That is the fingerprint of a market whose average is being carried by a cohort, while a long tail keeps grinding down underneath it — which is what a rate increase does to anything that borrows.
Our read
Three things are true at once and it is worth keeping all three.
The relief is real and it is earned. The uncertainty that was hanging over September has resolved: the Fed raised, said why, and signaled it isn’t finished. Markets generally prefer a known unpleasant thing to an unknown one, and Thursday was the market pricing that preference.
The earnings case is also real. S&P 500 profits are expected to grow roughly 32% this year against 2025, and the index trades at about 20 times forward estimates — rich, but not the kind of number that needs a miracle. Strong earnings and a resilient labor market are why investors think the economy can carry higher borrowing costs.
And the third thing: one green session is not a change of regime, and this desk’s own published rule did not move on Thursday. The three conditions we set in the September letter for putting new money to work were tested this week and two failed outright — core inflation ran 0.3% against a 0.1% test, and the Fed raised rather than held. Nothing about a 1.14% day repairs either one. So nothing new was bought. That is not pessimism; it is just what happens when you write the rule down in advance and then a good day arrives.