Wall Street shook off the shock of the Federal Reserve's rate hike on Thursday. The Dow Jones Industrial Average gained 300 points, effectively erasing half of the 600-point hemorrhage it suffered on Wednesday. It wasn't a broad-based relief rally; it was surgical. The S&P 500 climbed 1.1% while the tech-heavy Nasdaq Composite surged 1.7%, outpacing the broader market with a vengeance.
Nvidia was the engine room. Shares popped 2.5% after CEO Jensen Huang asserted the company will sell double the chips next year compared to this year's volume. That comment didn't just lift NVDA; it dragged the rest of the AI complex higher. Intel, Qualcomm, and AMD all posted gains between 3% and 8%, proving that the market believes the semiconductor supercycle is far from over.
But tech didn't do it alone. Crude oil prices dropped for the third consecutive day, easing supply-side anxiety. Reports indicate China privately urged Iran to rein in the Houthis in Saudi Arabia, a diplomatic signal that calmed traders. JPMorgan analysts remain skeptical, noting they have no base case for the end game of the Iran conflict, and Global Risk Management warned that supply risks persist. Still, Brent Crude futures found strong support at $100–$102, a level technical analysts say is hard to break without significant negative newsflow.
Bond yields cooled in tandem with the equity rally. The US 10-year yield slipped 10 basis points from its 5.04% high, while the 30-year also retreated nearly 10 basis points. Traders appear to have accepted the Fed's inflation-fighting credibility post-hike. In the UK, the Bank of England kept rates unchanged and scrapped plans to sell longer-dated bonds, pushing the 30-year yield down over 20 basis points from its near-6% peak.
All eyes now turn to the Bank of Japan. A 25-basis-point rate hike is fully priced in, but the commentary matters. Analysts warn that any disappointment in Governor Kazuo Ueda's remarks could weaken the Yen past the 160 mark against the US Dollar, potentially reigniting volatility in global markets.