CNBC Daily Open: One day makes all the difference

This report is from today's CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

New highs 
U.S. stocks rallied on Thursday, as all major indexes closed in the green. The S&P 500 and Dow Jones Industrial Average marked new record closes, while the tech-heavy Nasdaq Composite had its fourth-best day this year, fueled by a rally in tech. The regional Europe Stoxx 600 index rose 1.38%, with all major bourses and most sectors ending the day higher.  

Tech surges 
After taking a day to digest the U.S. Federal Reserve's rate cut, investors flocked to tech stocks. On Thursday, Tesla soared 7.4%, Nvidia popped 4% and Apple jumped 3.7%. Lifted by those stocks, the Nasdaq rose 2.5%, its fourth-biggest single-day gain in 2024. Its sharpest rally this year was a 3% increase on Feb. 22. 

"Recalibration" 
Fed Chair Jerome Powell's use of the word "recalibration" seemed to reassure investors that the central bank's 50 basis point cut wasn't that worrying. It signaled the Fed wasn't responding to a slowing economy, but shifting focus to ensuring employment doesn't dip further, wrote CNBC's Jeff Cox.   

Staying its hand 
The Bank of England decided to hold interest rates steady at 5%. The decision was nearly unanimous: Only one out of nine members in the Monetary Policy Committee voted to reduce rates by a quarter percentage point. Market watchers expect the BOE to cut rates at its next meeting in November. 

[PRO] Another big cut? 
Some experts thought the Fed would lower rates by a quarter percentage point at its September meeting. That call was wrong. A JPMorgan Chase economist nailed the half-point call – and he sees another big rate cut in November. 

The bottom line

"Twenty-four little hours / Brought the sun and the flowers / Where there used to be rain," sings American 1950s star Dinah Washington. 

Washington might as well be singing about the market's behavior. Immediately after the Fed announced the jumbo rate slash on Wednesday, stocks hit fresh highs before falling into the red by the end of that day.    

But twenty-four hours later, after investors assessed that the half-point cut probably didn't portend the start of a recession, major indexes rallied to close at record highs.  

The S&P climbed 1.7% to end at 5,713.64, the first time the broad-based index has broken through the 5,700 ceiling. Likewise, the Dow closed at 42,025.19, its first above the 42,000 level, after the index rose 1.26%.  

The Nasdaq, buoyed by a rally in names like Tesla, Nvidia and Apple, was the biggest winner among major indexes, surging 2.51%, for its fourth-best day this year.  

And while history shows that September hasn't been nice to stocks, it also tells us that when the S&P notches record highs during the month, the fourth quarter's likely to remain strong. Since 1950, this pattern has played out in 20 out of 22 occasions, noted Oppenheimer. 

Indeed, BMO is so bullish about the market that the bank raised its year-end target for the S&P to 6,100 – an 8.6% climb from Wednesday's close – the highest projection on Wall Street. 

"Much like our last target increase in May, we continue to be surprised by the strength of market gains and decided yet again that something more than an incremental adjustment was warranted," chief investment strategist Brian Belski wrote to clients in a Thursday note. 

At the end of Washington's song, she croons, "What a difference a day makes / And the difference is you." Powell can perhaps feel like Washington's serenading him.  

– CNBC's Alex Harring, Fred Imbert, Hakyung Kim and Lisa Kailai Han contributed to this story. 

Correction: An earlier version of this report did not state the time frame for the Nasdaq's best performance. It has been added to this report.