Light Wave


Dow surges 560 points as investors bet Fed is done raising rates

By Jake Beardslee · November 3, 2023

In brief…

  • U.S. stocks rallied on Thursday, Dow and S&P 500 on pace for biggest weekly gains this year
  • Investors optimistic Fed rate hikes may be ending after rates kept unchanged
  • New data showed declining labor costs and rise in jobless claims
  • Apple, Starbucks stocks rose on earnings beats; Meta, Airbnb fell
  • Attention turns to October jobs report on Friday
U.S. stocks ralliedThursday as investors grew hopeful the Fed may soon pause interest rate hikes, with the Dow and S&P 500 on track for their largest weekly gains this year.  Tobias Deml/Wikimedia

U.S. stocks rallied again on Thursday as investors grew increasingly optimistic that the Federal Reserve’s campaign of interest rate hikes may be nearing an end. The Dow Jones Industrial Average jumped 565 points, or 1.7%, while the S&P 500 rose 1.9% and the Nasdaq Composite gained 1.8%. Both the Dow and S&P 500 are on pace for their biggest weekly gains this year.

Fueling investor enthusiasm was the Fed’s decision on Wednesday to keep rates unchanged for the second consecutive meeting. Fed Chair Jerome Powell also indicated satisfaction with the downward trend in inflation. According to CME Group’s FedWatch tool, the odds of another rate hike in December have fallen to just 14.5%.

New economic data released Thursday added to hopes of an economic soft landing. Labor costs unexpectedly declined 0.8% last quarter, and jobless claims rose for the second straight week, suggesting the red-hot job market may be cooling.

Attention now turns to Friday’s October jobs report. Analysts forecast a solid 180,000 jobs added, with the unemployment rate holding at 3.8%, according to CNN.

In corporate news, Apple reports quarterly results after Thursday’s closing bell. Shares of the tech giant rose 2.1% ahead of the earnings release. Starbucks stock jumped 9.5% after beating estimates and posting record revenue. Tesla shares also rallied, gaining 6.3%.

Though all S&P 500 sectors traded higher, Meta shares slipped 0.3% after the company said it would start charging fees for ad-free Instagram and Facebook in Europe. Airbnb stock fell 3.3% despite topping revenue forecasts.