Wall Street soars to records in a rate-cut rally that swept the world

NEW YORK (AP) — Wall Street leapt to record highs as delayed jubilation swept across markets worldwide following the Federal Reserve’s big cut to interest rates. The S&P 500 jumped 1.7% Thursday, beating the all-time closing high it set in July. The Dow Jones Industrial Average rose 1.3%, also a record, and the Nasdaq composite climbed 2.5%. The gains followed rallies for markets across Europe and Asia. Some reports on the U.S. economy helped bolster hopes that it can manage to avoid a recession as the Fed continues to cut interest rates now that inflation is receding.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — Wall Street is romping toward records Thursday as a delayed jubilation sweeps markets worldwide following the Federal Reserve’s big cut to interest rates.

The S&P 500 was up by 1.9% in late trading and above its all-time closing high set in July. The Dow Jones Industrial Average was up 580 points, or 1.4%, and on track to top its record set on Monday. The Nasdaq composite was 2.8% higher with an hour left in trading.

The rally was widespread, and the company behind Olive Garden and Ruth's Chris, Darden Restaurants, helped lead the way with a jump of 7.8%. It said sales trends have been improving since a sharp step down in July, and it announced a delivery partnership with Uber.

Nvidia, meanwhile, barreled 4.6% higher and was once again the strongest force lifting the S&P 500. Lower interest rates weaken criticism by a bit that its shares and those of other influential Big Tech companies look too expensive following the frenzy around artificial-intelligence technology.

Wall Street's gains followed rallies for markets across Europe and Asia after the Federal Reserve delivered the first cut to interest rates in more than four years late on Wednesday.

It was a momentous move, closing the door on a run where the Fed kept its main interest rate at a two-decade high in hopes of slowing the U.S. economy enough to stamp out high inflation. Now that inflation has come down from its peak two summers ago, Chair Jerome Powell said the Fed can focus more on keeping the job market solid and the economy out of a recession.

Wall Street’s initial reaction to Wednesday’s cut was a yawn, after markets had already run up for months on expectations for coming reductions to rates. Stocks ended up edging lower after swinging a few times.

“Yet we come in today and have a reversal of the reversal,” said Jonathan Krinsky, chief market technician at BTIG. He said he did not anticipate such a big jump for stocks on Thursday.

Some analysts said the market could be relieved that the Fed’s Powell was able to thread the needle in his press conference and suggest the deeper-than-usual cut was just a “recalibration” of policy and not an urgent move it had to take to prevent a recession.

That bolstered hopes that the Federal Reserve can successfully walk its tightrope and get inflation down to its 2% target without a recession. So too did a couple reports on the economy released Thursday. One showed fewer workers applied for unemployment benefits last week, another signal that layoffs across the country remain low.

The pressure is nevertheless still on the Fed because the job market and hiring have begun to slow under the weight of higher interest rates. Some critics say the central bank waited too long to cut rates and may have damaged the economy.

Powell, though, said Fed officials are not in “a rush to get this done” and would make decisions on policy at each successive meeting depending on what the incoming data says.

Some investment banks raised their forecasts for how much the Federal Reserve will ultimately cut interest rates, anticipating even deeper reductions than Fed officials. Forecasts released Wednesday show Fed officials expect to cut interest rates by potentially another half of a percentage point in 2024 and another full point in 2025. The federal funds rate is currently sitting in a range of 4.75% to 5%.

Lower interest rates help financial markets in two big ways. They ease the brakes off the economy by making it easier for U.S. households and businesses to borrow money, which can accelerate spending and investment. They also give a boost to prices of all kinds of investments, from gold to bonds to cryptocurrencies. Bitcoin rose above $63,500 Thursday, up from about $27,000 a year ago.

An adage suggests investors should not “fight the Fed” and instead ride the rising tide when the central bank is cutting interest rates. Wall Street was certainly doing that Thursday. But this economic cycle has continued to break conventional wisdoms after the COVID-19 pandemic created an instant recession that gave way to the worst inflation in generations.

Wall Street is worried that inflation could remain tougher to fully subdue than in the past. And while lower rates can help goose the economy, they can also give inflation more fuel.

The upcoming U.S. presidential election could also keep uncertainty reigning in the market. A fear is that both the Democrats and Republicans could push for policies that add to the U.S. government’s debt, which could keep upward pressure on interest rates regardless of the Fed’s moves.

History may also offer few clues about how things may progress given how unusual the conditions are. This looks to have higher expectations for rate cuts than past easing cycles, according to strategists at Bank of America.

The economic conditions of this cycle one may resemble 1995 a bit, but unfortunately “no great analogs exist,” the strategists led by Alex Cohen wrote in a BofA Global Research report.

In the bond market, the yield on the 10-year Treasury edged up to 3.73% from 3.71% late Wednesday. The two-year Treasury yield, which more closely tracks expectations for Fed action, fell to 3.60% from 3.63%.

In stock markets aboard, indexes jumped even more across the Atlantic and Pacific oceans. They rose 2.3% in France, 2.1% in Japan and 2% in Hong Kong.

The FTSE 100 climbed 0.9% in London after the Bank of England kept interest rates there on hold. The next big move for a central bank arrives Friday, when the Bank of Japan will announce its latest decision on interest rates.

AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

Trader Michale Conlon, right, works on the floor of the New York Stock Exchange as Federal Reserve Chair Jerome Powell's news conference appears on a television screen behind him, Wednesday, Sept. 18, 2024. (AP Photo/Richard Drew)

The news conference of Federal Reserve Chair Jerome Powell appears on television screens on the floor of the New York Stock Exchange, Wednesday, Sept. 18, 2024. (AP Photo/Richard Drew)

Currency traders watch monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, Sept. 19, 2024. (AP Photo/Ahn Young-joon)

A currency trader talks on the phone near a screen showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, Sept. 19, 2024. (AP Photo/Ahn Young-joon)

Specialist Genaro Saporito, foreground, works with traders at his post on the floor of the New York Stock Exchange, Wednesday, Sept. 18, 2024. (AP Photo/Richard Drew)

The news conference of Federal' Reserve Chair Jerome Powell appears on a screen as trader Neil Catania works on the floor of the New York Stock Exchange, Wednesday, Sept. 18, 2024. (AP Photo/Richard Drew)

Trader Leon Montana works on the floor of the New York Stock Exchange, Wednesday, Sept. 18, 2024. (AP Photo/Richard Drew)

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI), top left, and the foreign exchange rate between U.S. dollar and South Korean won, top center, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, Sept. 19, 2024. (AP Photo/Ahn Young-joon)

Florida residents began repairing damage from Hurricane Milton, which smashed through coastal communities and tore homes to pieces, flooded streets and spawned a deadly tornadoes.

At least nine people are dead, but many expressed relief that Milton wasn’t worse.

Follow AP’s coverage of tropical weather at https://apnews.com/hub/hurricanes.

Here’s the latest:

President Joe Biden said ahead of a Friday briefing about hurricane damage that estimates are that Hurricane Milton alone caused $50 billion of damage. He also said his predecessor, former President Donald Trump, is “just the biggest mouth” for disinformation about the government’s response.

The president added that the disinformation is a “permanent state of being for some extreme people,” but that he belives the country as a whole wants facts and bipartisan cooperation to address natural disasters.

An apartment complex in Clearwater was evacuated early Thursday when water from a canal started rising.

Residents were gathered in a shopping center parking lot as crews worked to clear the property Friday.

Jared Lynch, 32, said he was at home on his first floor apartment when the water started to rise Wednesday night.

“It wasn’t that bad at 10 o’clock, but that’s when it started rising,” he said, adding that by 2 a.m., the water was up to his doorknobs. That’s when he left.

“There were literally people walking through the water with baskets on their heads. It was the craziest thing I’ve ever seen,” Lynch said.

But Deanne Criswell says FEMA will need additional funding at some point.

Criswell says the agency is keeping account every day of how much they’re drawing from the disaster assistance fund. That’s a pot of money allocated specifically to help the agency respond to emergencies across the country.

The fund gets replenished every year by Congress and is used to pay for recovery from hurricanes, floods, earthquakes and other disasters.

Congress recently replenished the fund with $20 billion — the same amount FEMA got last year. About $8 billion of that is set aside for recovery from previous storms and mitigation projects.

Criswell says the fund won’t have enough money to last through the entire fiscal year, which stretches to September of next year. She says at some point, they’ll have to go back to Congress to ask for a boost to the disaster relief fund.

“We will need one. It’s just a matter of when,” she said.

Mayor Lynne Matthews spoke at a news conference Friday with FEMA Administrator Deanne Criswell and the city’s manager, Gregory B. Murray.

Matthews says 121 people had to be rescued after Hurricane Helene made landfall Sept. 26 but rescuers only had to save three people after Milton came through.

“So people listened to the evacuation order,” Matthews said.

“I know we had teams out with the megaphones going through all of our mobile home communities and other places to let people know that they needed to evacuate,” she said.

Bruce Kinsler, 68, was part of a Polk County “push crew” that began clearing roads before 6 a.m. on Thursday. A truck struck Kinsler as he and a coworker were trying to clear a tree that had fallen across the road as the storm passed through the area. The driver of the truck was a county employee who was arriving to join Kinsler for post-storm recovery work.

“The tragedy of this incident is compounded by the fact that Bruce Kinsler was killed serving the residents of this county,” said Bill Braswell, chairman of the Polk County Commission. “We ask a lot of the employees as public servants, and they respond to the call. For this to happen is just a tragedy.”

The White House announced Biden’s visit but did not detail exactly where the president will travel.

Biden was scheduled to be briefed by aides Friday afternoon on the federal response and recovery in the aftermath of Hurricanes Milton and Helene. He’ll then deliver remarks from the White House to update the public about those efforts.

One of those Friday was a large pig stuck in high water at a strip mall in Lithia, FLorida, which is east of Tampa. Cindy Evers led the rescue of the pig and she’s also saved a donkey and several goats.

The animals are being taken to Evers’ farm for the time being.

“I’m high and dry where I’m at and I have a barn and nine acres,” she said. “So we have plenty of room for these animals to be safe.” Evers said she’ll figure out next steps later, such as finding the animals' owners.

Gov. DeSantis noted interactions with downed power lines and water.

“We are seeing hazards that are still there,” he said. He said people should take care around standing water and should use generators properly.

“You have to make the proper decisions and know that there are hazards out there,” he said.

Human-caused climate change intensified deadly Hurricane Milton ’s rainfall by 20 to 30% and strengthened its winds by about 10%, scientists said in a new flash study. The analysis comes just two weeks after Hurricane Helene devastated the southeastern United States, a storm also fueled by climate change.

World Weather Attribution researchers said Friday that without climate change, a hurricane like Milton would make landfall as a weaker Category 2, not considered a “major” storm, instead of a Category 3.

WWA’s rapid studies aren’t peer-reviewed but use peer-reviewed methods. The WWA compares a weather event with what might have been expected in a world that hasn’t warmed about 1.3 degree Celsius since pre-industrial times.

▶ Read more about how climate change affected Milton.

Only authorized personnel are allowed on the bases. There was damage and flooding at MacDill, which is home to U.S. Central Command and Special Operations Command.

There's no significant damage at Patrick and teams are working to restore critical infrastructure, according to the Air Force.

The river is 25 miles (40 kilometers) long and runs from eastern Hillsborough County, east of Tampa, into Tampa Bay.

The sheriff’s office asked people to call 911 if they need help getting out of their homes.

A pair of unwelcome and destructive guests named Helene and Milton have stormed their way into this year’s presidential election.

The back-to-back hurricanes have jumbled the schedules of Democrat Kamala Harris and Republican Donald Trump, both of whom devoted part of their Thursdays to tackling questions about the storm recovery effort.

The two hurricanes are forcing basic questions about who as president would best respond to deadly natural disasters, a once-overlooked issue that has become an increasingly routine part of the job. And just weeks before the Nov. 5 election, the storms have disrupted the mechanics of voting in several key counties.

A pick up drives past a guard gate on a flooded street in Siesta Key, Fla., following the passage Hurricane Milton, Thursday, Oct. 10, 2024. (AP Photo/Rebecca Blackwell)

FILE - People are rescued from an apartment complex after flooding in the aftermath of Hurricane Milton, Oct. 10, 2024, in Clearwater, Fla. (AP Photo/Mike Stewart, File)

FILE - A house sits toppled off its stilts after the passage of Hurricane Milton, alongside an empty lot where a home was swept away by Hurricane Helene, in Bradenton Beach on Anna Maria Island, Fla., Oct. 10, 2024. (AP Photo/Rebecca Blackwell, File)