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US stock markets closed at record highs on Thursday as investors cheered a Federal Reserve interest rate cut and a major deal agreed by AI chip makers. The Fed cut US rates by 25 basis points on Wednesday, with markets now forecasting two more rate cuts over its remaining two meetings this year and one more in 2026. The Dow Jones Industrial Average rose 0.27 per cent, the S&P 500 climbed 0.48 per cent and the tech-heavy Nasdaq jumped 0.94 per cent. Small caps performed well with the Russell 2000 also hitting an all-time high.
Gains were also driven by Intel, which jumped more than 22 per cent after Nvidia said it would invest $5billion in the struggling US chipmaker. Nvidia’s shares closed up 3.5 per cent for the day.
Neil Wilson, UK investor strategist at Saxo Markets, highlighted the US government’s 10 per cent stake in Intel as a possible sign of things to come. He said: ‘Huge changes afoot at Intel, and perhaps a sign of the way things are going with consolidation and cooperation in the tech space – driven by national security and trade policies emanating ultimately from the Trump White House.
‘The US needs Intel or it’s reliant on Taiwan Semi. Ultimately, this could just be the start to greater pooling of resources, harnessing domestic tech and ensuring it remains focused on doing what the government requires of it. ‘Further down the line, a Mag 7 mega-merger maybe, using profits to fund government programmes?’
Gold recovered by 0.2 per cent in early trading in London to $3,684.40 per ounce. UK and European shares were more muted on Friday morning, with the FTSE 100 and the pan-European STOXX 600 flat. Both indices are set to end a central-bank-heavy week marginally lower.
The domestically-focused FTSE 250, however, was trading slightly lower for the day, reflecting weaker sterling and growing concerns for the British economy after official data showed government borrowing came in higher than expected last month. Richard Hunter, head of markets at Interactive Investor, said: ‘The general economic despair for the outlook on the domestic economy weighed on the FTSE250 at the open, although the index has managed a gain of 5 per cent in the year to date, mainly due to exogenous factors such as revival of investment interest in the UK more generally. ‘The premier index also found the going heavy in opening exchanges, although its gain of 12.9 per cent so far this year is further proof of overseas demand, even if its temporary slip is more reflective of investors returning to the flying US market in their droves.’
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