Tech stocks lift US markets as bond yields and oil prices ease
American equities rallied on Thursday, led by a surge in technology shares, following the Federal Reserve’s first interest rate increase in three years.
Major US stock indexes climbed on Thursday, driven by strong performance in the technology sector, a day after the Federal Reserve raised interest rates for the first time since 2023. The Nasdaq Composite gained 1.7 per cent, the S&P 500 rose 1.1 per cent, and the Dow Jones Industrial Average increased 0.6 per cent. Information technology was the top-performing sector in the S&P 500, rising more than 2 per cent, reversing a previous stretch where the major indexes had closed lower for seven of eight sessions.
The market move followed the Federal Reserve’s unanimous decision to lift rates by a quarter of a percentage point to a new range of 3.75 per cent to 4.00 per cent. Chair Kevin Warsh told reporters that inflation has been "too high ... for too long," with the latest annual rate reading at 3.4 per cent. Despite the hike, the 10-year Treasury yield dropped to approximately 4.94 per cent in late-afternoon trading, down more than eight basis points from the previous close.
Investor attention has now turned to the likely path forward for rates. According to the CME FedWatch tool, traders see a 53 per cent likelihood that the Fed will raise interest rates a further quarter-percentage point at its late-October meeting, and an 87 per cent likelihood of a similar increase in December after the US midterm elections. Meanwhile, the average rate on a 30-year fixed mortgage rose to 6.95 per cent from 6.76 per cent the previous week, marking the highest level since late January 2025.
Crude oil prices extended recent declines on optimism that supply disruptions from a closed Saudi Arabian pipeline would be short-lived. US benchmark West Texas Intermediate prices were down 1.2 per cent to $101.25 a barrel, while Brent crude futures declined 1.7 per cent to just above $104. The pullback in energy costs provided some relief to investors concerned about inflationary pressures stemming from the ongoing conflict in the Middle East.
Generac Holdings shares surged 19 per cent after the company announced a deal worth up to $8 billion to sell backup power generators to Amazon for its data centres. The agreement includes $2.4 billion worth of generators expected to be delivered over the next two years, as well as a warrant for Amazon to purchase up to 1.69 million shares of Generac. Amazon shares advanced more than 2 per cent, joining other major technology firms in the gains.
Other notable movers included Arm Holdings, whose shares rose 8 per cent after CEO Rene Haas expressed increased confidence in meeting the company’s $2 billion sales target for its debut AI chip. Nokia shares also surged 5 per cent in premarket trading following an announcement of an expanded partnership with Microsoft to develop an "agentic, unified data foundation" for telecommunications providers.
