Wall Street Hits Record Highs as Fed Rate Cut and U.S.-China Talks Lift Optimism

The Nasdaq advanced 160.75 points or 0.7% to 22,631.48, the S&P 500 climbed 32.40 points or 0.5% to 6,664.36 and the Dow rose 172.85 points or 0.4% to 46,315.27. Wall Street’s upward momentum has continued, pushing major averages to record highs despite September’s usual reputation as a weak month for stocks. Optimism over lower interest rates fueled the rally, with the Federal Reserve cutting rates by a quarter point and signaling two more cuts this year. Additional gains followed President Trump’s announcement of a “very productive” call with China’s Xi Jinping, covering trade, fentanyl, the Ukraine conflict, and a TikTok deal. Still, overall trading activity remained somewhat subdued due to the absence of major U.S. economic data. Gold stocks moved sharply higher amid an increase by the price of the precious metal, resulting in a 4.3% surge by the NYSE Arca Gold Bugs Index. Software stocks were significantly strong, as reflected by the 1.8% gain posted by the Dow Jones U.S. Software Index. Energy stocks notably moved downwards amid an extended pullback by the price of crude oil. Reflecting the weakness in the sector, the Philadelphia Oil Service Index slumped by 2.1% and the NYSE Arca Oil Index slid by 1.5%. Housing stocks too saw considerable weakness on the day, dragging the Philadelphia Housing Sector Index down by 1.2%. Asia-Pacific stocks turned in another mixed performance. Japan's Nikkei 225 Index slid by 0.6% and China's Shanghai Composite Index fell by 0.3% while Australia's S&P/ASX 200 Index increased by 0.3%. The major European markets moved modestly lower over the course of the session while the German DAX Index dipped by 0.2%, the U.K.'s FTSE 100 Index edged down by 0.1% and the French CAC 40 Index closed just below the unchanged line. In the bond market, treasuries extended the downward move seen over the two previous sessions. As a result, the yield on the benchmark ten-year note which moves opposite of its price, climbed 3.5 bps to a two-week closing high of 4.13%.