US STOCKS-US indexes up more than 1% on strong earnings, bets of peak US interest rates

Wall Street's three main stock indexes all rallied more than 1% on Thursday on hopes that the U.S. Federal Reserve had reached the end of its interest rate hiking campaign, while a raft of upbeat corporate updates added to the bullish mood. The Fed held interest rates steady on Wednesday as expected, and while Chair Jerome Powell left the door open to further tightening he also acknowledged the impact of a recent surge in bond yields on the economy.

Wall Street's three main stock indexes all rallied more than 1% on Thursday on hopes that the U.S. Federal Reserve had reached the end of its interest rate hiking campaign, while a raft of upbeat corporate updates added to the bullish mood.

The Fed held interest rates steady on Wednesday as expected, and while Chair Jerome Powell left the door open to further tightening he also acknowledged the impact of a recent surge in bond yields on the economy. The comments, which were perceived to be dovish, sent longer-dated U.S. Treasury yields tumbling. The 10-year Treasury note yield was last down 12.4 basis points at 4.667%, tracking its biggest one-day decline since Oct. 10.

"The set-up was well primed for a bit of a relief rally. Markets have been under pressure for the last month," said Emily Leveille, portfolio manager at Thornburg Investment Management in Santa Fe, New Mexico. "The market was starting to get worried the Fed was going to have to continue to raise rates." she said. "Then yesterday, we got hinting from the Fed they might be very inclined to pause rate hikes, at least for now and wait for some of the impact of the 500 basis point increase in rates that we've had over the last two years to flow through."

Traders' bets that the Fed will hold rates steady in December rose to about 83% from 79.5% the previous day, according to CME Group's FedWatch tool. All three major stock indexes touched their highest levels since Oct. 19.

The Dow Jones Industrial Average rose 511.03 points, or 1.54%, to 33,785.61; the S&P 500 gained 74.11 points, or 1.75%, at 4,311.97; and the Nasdaq Composite added 217.54 points, or 1.67%, at 13,279.01. Mega-cap growth stocks Nvidia, Alphabet and Tesla rose between about 1% and 6%.

All 11 major S&P 500 sectors rose, led by rate-sensitive real estate stocks gaining more than 3%. In earnings, Qualcomm climbed more than 5% after the chip designer forecast first-quarter sales and profit above Wall Street estimates.

PayPal advanced almost 7% as the payments giant raised its full-year adjusted profit forecast. Starbucks jumped almost 11% after fourth-quarter results beat estimates, while drugmaker Eli Lilly jumped more than 4% after surpassing quarterly sales estimates.

Apple shares advanced just under 2% ahead of its quarterly numbers due after markets close on Thursday. Data on Thursday showed the number of Americans filing new claims for unemployment benefits increased moderately last week.

This week's main data point is the October non-farm payrolls report due on Friday, which will offer more clarity on the state of the labor market. Other big stock movers included Moderna, which dropped almost 8% after lowering its 2023 COVID-19 vaccine sales forecast.

Among gainers, data analytics firm Palantir Technologies rose almost 21% on forecasting quarterly revenue above estimates. The Cboe Volatility index, also known as Wall Street's fear gauge, touched a three-week low.

Advancing issues outnumbered decliners on the NYSE by a 6.87-to-1 ratio; on Nasdaq, a 3.05-to-1 ratio favored advancers. The S&P 500 posted 10 new 52-week highs and nine new lows; the Nasdaq Composite recorded 37 new highs and 123 new lows.