Investor sentiment improved as expectations for multiple rate cuts gained traction. Money markets are now pricing in two additional rate reductions before year-end, bringing borrowing costs closer to a neutral 3% level.
The Bloomberg Magnificent Seven Index added 0.5%, while the Russell 2000 Index jumped 1.3%, signaling renewed interest in smaller-cap stocks. In Europe, the Stoxx 600 index remained little changed, and the MSCI World Index rose 0.6%.
Corporate earnings added momentum to the rally. Intel Corp gained 3.3% after returning to profitability and issuing an upbeat revenue forecast, suggesting progress in its recovery efforts. Ford Motor Co. surged 9.3% following upbeat quarterly results and expectations of a full recovery from supply disruptions next year. Procter & Gamble also reported higher-than-expected sales as consumers absorbed modest price increases.
However, Deckers Outdoor Corp. dropped 14% after forecasting weaker 2026 revenue, reflecting pressure on consumer spending. In contrast, Palantir Technologies rose 2.8% after securing a $200 million deal for artificial intelligence software with Lumen Technologies.