The major averages performed well with each of the major averages setting new all time highs one day after the Federal Reserve lowered interest rates by a quarter percent. The Dow Jones Industrial Average rose 124 points, or 0.25%. The S&P 500 rose 31 points or 0.48% while the Nasdaq Composite rose 209 points or 0.94%. The Russell 2000 small-cap index led the rally today, up 2.5%, closing at a record high, surpassing its last closing high in Nov. 2021. Small cap companies in the Russell 2000 tend to benefit from lower interest rates as they often rely more on external funding for their operations and growth compared to larger, cash-rich firms.
Besides small caps, tech had another great day led by Intel 22% thanks to a $5 billion investment from Nvidia to co-develop data centers and PC chips. The Trump administration was not involved in the Intel-Nvidia deal, but the government does own 10% of Intel. The deal could be the first step in an acquisition or breakup of Intel. Rivals, AMD and Broadcom were lower on the day.
On the earnings front, Darden Restaurant fell 7% to a six month low on earnings. The owner of Olive Garden missed earnings estimates even as sales grew 10% to $3 billion. The weakness in earnings and the stock were blamed on higher food and labor costs, coupled with pressure from customers to keep prices low as the economy slows.
Treasuries were higher even as the Fed cut rates yesterday. The 10-year Treasury yield added 2.5 basis points to close at 4.10%. The 2-year Treasury yield gained 2 basis points to 3.56%. The 30-year Treasury bond yield rose by 4 basis points to 4.71%.
In the commodity space, oil was modestly lower on economic concerns. Gold fell a percent on a weaker US dollar. Crypto-currencies performed well rising nearly 2%.
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