Stocks Get Technology Boost As Intel Surges 25%: Markets Wrap

A rally in technology heavyweights lifted stocks, which also climbed on speculation that Federal Reserve interest-rate cuts will keep powering Corporate America.

Equities headed toward all-time highs, with the Nasdaq 100 rising 1.2%. A $5 billion investment from Nvidia Corp. in Intel Corp. drove the ailing chipmaker up 25%, the most in nearly four decades. Small caps, which tend to outperform during policy easing, approached their record.

Bonds erased gains after data showed jobless claims dropped by the most in nearly four years, suggesting companies are still holding onto workers. The data only reinforced Fed Chair Jerome Powell’s meeting-by-meeting message, said Ian Lyngen at BMO Capital Markets.

Fed officials lowered their benchmark rate by a quarter percentage point Wednesday and penciled in two more reductions this year aimed at supporting the labor market. Bets on easing have helped US stocks rally in recent weeks.

“The Federal Reserve is cutting interest rates during a time when stocks are at record highs and the economy is still growing,” said Robert Schein at Blanke Schein Wealth Management. “This dynamic is bullish for stocks.”

Now that rates have been moving lower and the Fed is looking to cut rates a few more times, Schein says he’s even more bullish on big tech and financial stocks.

“Big tech stocks tend to outperform during lower interest rate environments, and financials may see a boost from additional M&A and mortgage activity that may come about from lower rates,” Schein said.

Worries have been mounting for weeks that the S&P 500’s push to record after record risks becoming a bubble, with the index’s swollen valuation cited most often as cause for concern.

Critics point to the tech sector’s outsize influence on this year’s gain, with just five stocks, all megacap tech firms, driving about half of the advance. But a closer look shows tech giants have largely justified their elevated valuations with profit growth.

“For now, investors have happily bought every dip, largely thanks to AI-driven enthusiasm and consistently strong results from big tech,” said Fawad Razaqzada at City Index and Forex.com. “The concern is that if tech momentum cools, the rest of the market may struggle to justify current valuations.”

That leaves the rally vulnerable if investor confidence wavers, putting the S&P 500 forecast on a more cautious stance, he noted.

“We believe lower interest rates, robust earnings growth, and AI tailwinds will support further potential gains for global equities over the next year,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.

Investors under-allocated to equities and looking to manage timing risks should consider phasing in and using market dips to add exposure to preferred areas, she said.

Her firm estimates that the Fed will cuts rates by a further 75 basis points between now and the first quarter of next year.

At Ameriprise, Anthony Saglimbene says prospects for two more rate cuts in 2025 is a positive for equity markets and risk appetite in general heading into year-end.

But that is “if labor market conditions do not deteriorate much further, consumer spending remains stable, and Big Tech delivers on third-quarter profit expectations.”

Corporate Highlights:

Nvidia Corp. agreed to invest $5 billion in Intel Corp. and said the two will co-develop chips for PCs and data centers, a surprise move to help prop up an ailing archrival.
Walt Disney Co.’s ABC network is taking Jimmy Kimmel Live! off the air indefinitely amid a backlash to remarks the late-night host made about the killing of Republican activist Charlie Kirk.
Cracker Barrel Old Country Store Inc.’s sales guidance missed expectations, showing the brand is still dealing with the fallout from its controversial and short-lived logo change.
American Express Co. is boosting the annual fee for its Platinum consumer credit card to $895 — a $200 increase — and adding about $1,500 of potential perks to help customers get over the sticker shock.
Novo Nordisk A/S’s diabetes blockbuster Ozempic beat Eli Lilly & Co.’s older drug Trulicity in a real-world survey of certain US patients.
GE Healthcare Technologies Inc. is exploring options including the sale of a stake in its China unit, people familiar with the matter said.
Uber Technologies Inc. will trial food deliveries by drone with Flytrex Inc., marking the rideshare giant’s return to experiments with logistics.
Deutsche Bank AG warned that a broad rollback of financial regulations in the US will give the German lender’s overseas competitor an edge.
Hyundai Motor Co. raised its revenue forecast for 2025 while paring profit expectations as the South Korean automaker accelerates investment in the US to mitigate tariff costs.
Huawei Technologies Co. unveiled new technology from memory chips to AI accelerators Thursday, outlining publicly for the first time its multiyear plan to challenge Nvidia Corp.’s dominance in a growing market.

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