US equities recorded their best day in six weeks on Thursday, as the S&P 500 and the Nasdaq Composite each climbed more than 1.1 per cent, according to market data. The rally came after the Federal Reserve raised interest rates, a decision that might ordinarily weigh on share prices, but which investors appeared to take as a sign of confidence in the economy.
The technology-heavy Nasdaq led the advance, helped by strong results from Nvidia, the chipmaker whose processors power much of the artificial intelligence boom. Nvidia's performance has become a bellwether for the wider technology sector, and its gains rippled through semiconductor and hardware stocks on both sides of the Atlantic.
The Fed's rate increase had been widely anticipated, and the market's positive reaction suggests investors had already priced in the move. Rather than treating the hike as a drag on growth, traders focused on the central bank's assessment of economic resilience. The session's gains were broad, with cyclical and growth shares both participating, though technology names provided the clearest lift.
The scale of the one-day advance — the strongest in six weeks — underlines how sensitive markets remain to signals from the Fed and to earnings from a handful of large technology companies. Nvidia's results have taken on outsized importance because its chips are central to the data-centre infrastructure that supports AI models. Any sign of sustained demand from cloud providers and enterprise customers tends to lift the entire supply chain, from chip designers to equipment makers.
For British investors, the move matters because US equities remain the dominant force in global portfolios. A rally on Wall Street often feeds through to European and Asian markets, and the technology theme in particular has driven returns for pension funds and retail investors alike. The FTSE 100 has less direct exposure to the AI trade than its US counterparts, but sentiment is global, and a stronger US session can support risk appetite in London.
The Fed's decision also carries implications for borrowing costs on both sides of the Atlantic. Higher US rates tend to strengthen the dollar, which can weigh on sterling-denominated returns from American assets, though the immediate market reaction focused on growth rather than currency effects. The Bank of England's own rate path remains a separate question, but US monetary policy sets the tone for global financial conditions.
Analysts have cautioned that a single strong session does not reverse the broader uncertainty facing markets. Inflation, the pace of rate increases, and the durability of AI-driven demand are all unresolved. Nvidia's results provide evidence that spending on AI infrastructure remains robust, but the market's dependence on a small group of technology leaders is itself a risk. If those companies stumble, the index-level impact could be significant.
Thursday's gains nevertheless offer a clear signal: investors are willing to look past a rate rise when corporate earnings, particularly in technology, justify it. The coming weeks will test whether that optimism can hold as more companies report and the Fed's next moves become clearer.