US stocks opened higher Thursday as investors embraced enthusiasm about AI and digested the September jobs report.
The Dow rose 626 points, or 1.36%. The S&P 500 gained 1.65%. The tech-heavy Nasdaq Composite rose 2.1%.
Wall Street’s fear gauge, the VIX, fell 17% as investors leaned into optimism about AI. Nvidia shares (NVDA) gained 3.7%.
The US economy added 119,000 jobs in September, although the unemployment rate ticked up to 4.4%. The better-than-expected job gains could boost arguments for the Fed to hold rates steady at its December meeting — but the higher unemployment rate complicates the picture.
Two-year Treasury yields, which can track expectations for the Fed’s benchmark interest rate, were relatively unchanged but ticked slightly lower.
“Equities (stocks) like the fact that payrolls were stronger than expected, suggesting the economy is still on a firm footing, while the bond market likes the rise in unemployment and slowdown in wage growth which may keep the case for a December Fed cut just about alive,” Seema Shah, chief global strategist at Principal Asset Management, said in an email.
Optimism about an AI boom, resilient corporate profits and hopes for lower interest rates helped stocks climb higher in recent months before a dip in recent weeks.
Wall Street is feeling better about the prospects of AI after Nvidia’s stellar earnings. Now the Fed’s interest rate policy could become more of a key focus for determining whether stocks can rebound from this recent pullback or if there’s more turbulence ahead. The S&P 500 is down 2.5% from a record high set in late October.