Wall Street’s three main stock indexes rallied nearly 2% on Thursday due to optimism that the U.S. Federal Reserve has completed its interest rate hiking campaign. Additionally, a series of positive quarterly financial updates contributed to the bullish sentiment.

As expected, the Fed decided to keep interest rates steady on Wednesday. Although Chair Jerome Powell did not rule out the possibility of further tightening, he acknowledged the impact of recent increases in bond yields on the economy.

These comments were interpreted as indications that the central bank has finished raising interest rates, leading to a decline in longer-dated U.S. Treasury yields and providing support for stocks.

Justin Burgin, vice president of equity research at Ameriprise Financial, stated that Powell’s comments during the press conference were exactly what investors wanted to hear. Burgin also highlighted better-than-expected earnings reports, noting that while current-quarter guidance may be weaker than anticipated, analysts are still predicting growth.

Burgin expressed satisfaction that the fourth quarter did not experience any major setbacks, stating, “The fact that the wheels didn’t come off the bus for the fourth quarter is pretty good.”

According to the latest data from LSEG, Wall Street analysts are forecasting fourth-quarter earnings growth of 7.2%, down from the initial estimate of 11% on October 1. However, for the third quarter, 80.9% of companies that have reported so far have exceeded analysts’ expectations, while 14.9% have fallen short.

The Dow Jones Industrial Average rose by 564.5 points, or 1.7%, to reach 33,839.08. The S&P 500 gained 79.92 points, or 1.89%, closing at 4,317.78. The Nasdaq Composite added 232.72 points, or 1.78%, reaching 13,294.19.

The S&P 500, which has experienced four consecutive days of gains, recorded its largest one-day percentage increase since April. Additionally, the benchmark index closed above its 200-day moving average for the first time since October 24.

The small-cap Russell 2000 index saw a significant one-day percentage gain of 2.7%, its largest since June 6.

The article is accompanied by an image of traders working on the floor of the New York Stock Exchange on October 27, 2023.The Nasdaq experienced its largest one-day percentage increase since July 28, marking its fifth consecutive day of gains.

Emily Leveille, a portfolio manager at Thornburg Investment Management, stated that after the stock market decline in October, conditions were favorable for a relief rally.

All 11 major sectors of the S&P 500 saw gains, with energy and rate-sensitive real estate leading the way with increases of over 3%. The communications services sector had the smallest increase at 0.9%, followed by consumer staples with a gain of 1.3%.

Starbucks shares (SBUX.O) rose 9.5% after the company’s fourth-quarter results exceeded expectations. Qualcomm (QCOM.O) shares also climbed 5.8% after the chip designer forecasted first-quarter sales and profit above estimates.

PayPal shares (PYPL.O) jumped 6.6% as the company raised its full-year adjusted profit forecast. Apple shares (AAPL.O) closed up 2% ahead of its quarterly report, which is scheduled for later in the day.

Other significant stock movementsModerna, the pharmaceutical company (MRNA.O), exceeded revenue expectations but experienced a decline in stock prices due to a downward revision of its COVID-19 vaccine sales forecast for 2023.

Earlier data revealed a moderate increase in the number of Americans filing new claims for unemployment benefits last week.

The highlight of this week’s economic data release will be the October non-farm payrolls report, scheduled for Friday.

Advancing issues outnumbered decliners on the NYSE by a ratio of 7.30-to-1, while on Nasdaq, the ratio favored advancers at 3.16-to-1.

The S&P 500 recorded 10 new 52-week highs and nine new lows, while the Nasdaq Composite achieved 40 new highs and 140 new lows.

A total of 11.96 billion shares were traded on U.S. exchanges, surpassing the 10.78 billion average for the last 20 sessions.

Reporting by Sinéad Carew in New York, Amruta Khandekar and Shashwat Chauhan in Bengaluru; Editing by Savio D’Souza, Shounak Dasgupta, Saumyadeb Chakrabarty, Maju Samuel, and Richard Chang.

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