S&P 500 surges to record high close on euphoria over Fed rate cut
Dow closes above 42,000 for the first time
BofA expects Fed to go for 75-bp cut in Q4
US big banks rise after Fed's rate cut
S&P 500 +1.70%, Nasdaq +2.51%, Dow +1.26%
Adds Dow milestone number
By Noel Randewich and Purvi Agarwal
Sept 19 (Reuters) -The S&P 500 surged to a record high close on Thursday, the day after the Federal Reserve cut interest rates by 50 basis points and indicated more rate cuts were on the horizon.
The blue chip Dow Jones Industrial Average also registered a record closing high, ending the session above 42,000 for the first time.
Heavyweight stocks that have enjoyed much of this year's stock market rally made fresh gains, with Tesla TSLA.O surging over 7%, and Apple AAPL.O and Meta Platforms META.O each up almost 4%.
AI powerhouse Nvidia NVDA.O jumped 4%, helping lift the PHLX semiconductor index .SOX surge 4.3%.
Better-than-expected jobless claims data further stoked global risk appetite.
On Wednesday, the Federal Reserve announced a rate cut at the high end of expectations, and said it had greater confidence inflation was under control. Fed Chair Jerome Powell said the U.S. economy remained strong and the central bank would decide on the appropriate pace of future rate cuts.
"The Fed has sanctioned a pretty strong economic picture here, and so we're just seeing the money flow back into some of the sectors that have perhaps underperformed so far this quarter," said James Ragan, Director of Wealth Management Research at D.A. Davidson.
The small-cap Russell 2000 index .RUT rose 2.1% as lower interest rates boosted prospects of reduced operating costs and greater profits.
The S&P 500 <.SPX>climbed 1.70% to end the session at 5,713.64 points, its highest close ever.
The Nasdaq <.IXIC>gained 2.51% to 18,013.98 points, while the Dow Jones Industrial Average DOW.N rose1.26% to 42,025.19 points.
Of the 11 S&P 500 sector indexes, eight rose, led by information technology .SPLRCT, up 3.08%, followed by a 2.2% gain in consumer discretionary .SPLRCD.
In extended trade, Fedex FDX.N dropped 10% after the company cut its revenue target for its fiscal year 2025.
BofA Global Research said it now expects a total of 75 basis points in rate cuts by the end of this year, steeper than its previous forecast of 50 bps.
Evercore ISI data going back to 1970 showed the S&P 500 has posted an average 14% gain in the six months following the first reduction of a rate-cutting cycle.
September has generally been a disappointing month for U.S. equities with the S&P 500 notching an average loss of 1.2% since 1928.
The S&P 500 banks index .SPXBK rose 2.5%, with gains in Citigroup C.N and Bank of America BAC.N after they lowered their respective prime rates.
Fertility benefits management firm Progyny PGNY.O plunged 33% after a significant client notified the company it had elected to exercise a 90-day option to terminate its services agreement.
Advancing issues outnumbered falling ones within the S&P 500 .AD.SPX by a 2.4-to-one ratio.
Across the U.S. stock market .AD.US, advancing stocks outnumbered falling ones by a 3.8-to-one ratio.
Volume on U.S. exchanges was relatively heavy, with 12.3 billion shares traded, exceeding the average of 10.8 billion shares over the previous 20 sessions.
US inflation and interest rates https://reut.rs/4esuPHd
Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru and by Noel Randewich in San Francisco; Editing by Nivedita Bhattacharjee, Maju Samuel and David Gregorio
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