Stocks rose Thursday as traders digested the Federal Reserve's Wednesday decision to lower interest rates by a half percentage point.

The Dow Jones Industrial Average jumped 427 points, or 1%. The S&P 500 climbed 1.7%, and the Nasdaq Composite surged 2.7%.

Traders got some validation that the Fed was engineering a soft landing for the economy on Thursday as weekly jobless claims fell by 12,000 to 219,000, which was far below estimates.

Tech stocks rallied as the rate cut spurred investors to return to a risk-on mood. Nvidia and AMD shares popped more than 5% and 4%, respectively. Micron Technology traded more than 2% higher. Other big tech stocks such as Meta and Alphabet advanced 3.3% and 2.2%, respectively.

Stocks leveraged to lower rates spurring the economy also jumped Thursday morning. Financial giant JPMorgan Chase rose 1.5%. Industrial stock Caterpillar and Home Depot gained 3.3% and 1.5%, respectively.

The Fed slashed its overnight lending rate to a range of 4.75% to 5% from 5.25% to 5.5% on Wednesday, which came as a surprise to some investors who criticized the size of this initial cut. This is the first rate reduction delivered by the Fed in four years.

"This Fed cut cycle is setting the stage for markets to be really strong over the next one month or three months," Fundstrat Global Advisors head of research Tom Lee told CNBC's "Squawk on the Street" on Thursday.

To be sure, Lee noted that he expects uncertainty to rise ahead of the upcoming U.S. presidential election.

After seesawing for most of Wednesday afternoon, stocks ultimately closed the session lower. Both the S&P 500 and 30-stock Dow initially rallied to new record highs right after the Fed announced its interest rate cut decision.

Technology stocks pop, Nasdaq heads for best day since early August

The Nasdaq Composite rallied 2.8% and headed for its best day since early August as the Federal Reserve's rate-cutting campaign lifted hopes for an easier growth environment.

Airbnb was the best performer in the concentrated Nasdaq-100, surging more than 7%. Advanced Micro Devices, KLA Corp and Tesla jumped near 6% each, while Nvidia, Applied Materials and CrowdStrike each added about 5%.

Other Magnificent Seven leaders also headed for a winning session, with Apple and Meta Platforms gaining more than 4% and 3%, respectively. Alphabet, Microsoft and Amazon were last up at least 2%.

— Samantha Subin

BMO raises year-end S&P 500 target to Street high

BMO hiked its year-end target for the S&P 500 to a Wall Street high.

Chief investment strategist Brian Belski lifted his year-end target for the broad index by 500 points to 6,100. That new forecast suggests the S&P 500 can climb 8.6% from Wednesday's close.

"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," Belski wrote to clients in a Thursday note.

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— Alex Harring

GE Vernova is a top S&P 500 performer over past month

Gordon Haskett's Don Bilson put a spotlight on GE Vernova's recent strong performance. The former General Electric business has been the top performer in the S&P 500 over the past month as it's seen as a solution to artificial intelligence's need to power its models at data centers.

Bilson noted that the combined market cap of GE Vernova, GE Healthcare and GE Aerospace yields more than $300 billion in value for the former GE units — three times GE's market cap at the end of 2019.

"'Triples' aren't necessarily hard to find in the Industrials space since the late 2019," he wrote in a research note, citing Eaton, Parker-Hannifin and Trane as other examples. "Still. GE was almost considered to be toxic back then and by bouncing back so resoundingly, GE has established itself as one of the best, if not THE best, event-driven stories of this decade, which is almost halfway over."

—Christina Cheddar Berk

Wells Fargo downgrades utilities sector after big rally

The catch-up rally for utility stocks is about to run out of steam, according to Wells Fargo.

The firm downgraded the utilities sector to neutral from overweight. Strategist Christopher Harvey said in a note to clients that the narrative around the group has changed from late last year, when Wells Fargo upgraded the sector.

"The excessively negative sentiment and oversold technicals from late-2023 have eased. The group is a top performer YTD, indicating event-risk uncertainty is well reflected," the note said.

The utilities sector, as measured by the SPDR XLU ETF, is up about 24% year to date, which is better than the S&P 500 and the Nasdaq Composite.

— Jesse Pound

Stocks open higher Thursday

Stocks began Thursday's trading session in the green.

The Dow Jones Industrial Average jumped 552 points, or 1.3%. The S&P 500 added 1.6%, while the Nasdaq Composite advanced 1.6%.

— Hakyung Kim

Homebuilder stocks surge on hopes for lower mortgage rates

Homebuilder stocks were higher before the opening bell on Thursday, after the Federal Reserve's oversized rate cut spurred hopes that mortgage rates could fall.

Shares of Lennar Corporation ticked up nearly 4%, while D.R. Horton climbed roughly 3%. The SPDR S&P Homebuilders ETF (XHB) advanced more than 3% before the opening bell.

— Brian Evans

Cyclical stocks climb in premarket trading

Stocks that are traditionally tied to economic growth were trending higher ahead of the opening bell on Thursday.

Shares of Caterpillar rose more than 2%, while Target added about 1.5%. Bank stocks were also performing well, with JPMorgan gaining 1.2% and KeyCorp climbing 2.5%.

The morning gains for these stocks could be a sign that traders are growing more confident about the economy after the Federal Reserve's rate cut on Wednesday.

— Jesse Pound

Technology stocks rally in premarket trading as risk-on sentiment returns

Investors snatched up technology names in premarket trading on the bet that a lower-rate environment would benefit growth stocks following Wednesday's aggressive rate cut from the Federal Reserve.

Chipmaking stocks and artificial intelligence names surged, with Nvidia, Advanced Micro Devices and Broadcom last up more than 3%. Marvell Technology and Super Micro Computer jumped about 4% each.

Other popular Magnificent Seven names beyond Nvidia also powered higher, with Apple, Amazon, Microsoft and Alphabet last up about 2% each. Meta Platforms rose 2.6%, while Tesla neared a 3% gain.

Nasdaq-100 futures popped more than 2%.

— Samantha Subin

Jobless claims slide to lowest level since May

Initial filings for unemployment insurance slumped last week, indicating a benign pace of layoffs, the Labor Department reported Thursday.

Weekly jobless claims totaled 219,000 for the week ending Sept. 14, the lowest since May 18 and below the Dow Jones estimate for 229,000. The total was 12,000 below the previous week's upwardly revised level.

Continuing claims, which run a week behind, edged lower to 1.829 million.

—Jeff Cox

Ray Dalio calls Fed's move a difficult 'balancing act'

Ray Dalio, the founder of Bridgewater Associates, said the Federal Reserve is navigating a difficult "balancing act" as the central bank started its ease cycle with a big rate cut.

"The challenge of the Federal Reserve is to keep interest rates high enough that they're good for the creditor, while keeping them not so high that they're problematic for the debtor," Dalio told CNBC's "Squawk Box Asia" on Thursday.

The notable investor once again expressed concerns about "the enormous amount of debt" that is being created by governments and monetized by central banks.

"Those magnitudes have never existed in my lifetime," he said. "I see a big depreciation in the value of that debt through a combination of artificial low real rates, so you won't be compensated."

— Yun Li

Darden, DoorDash, Nvidia among stocks making biggest premarket moves

Check out the companies making headlines before the bell.

• Darden Restaurants — Shares advanced nearly 11% after the restaurant operator announced a multiyear partnership with Uber for on-demand delivery later this year. The company reported weaker-than-expected quarterly earnings and revenue, however, as its sales weakened at Olive Garden and its fine dining restaurants.
• DoorDash — The food delivery stock rose more than 3% after an upgrade to buy from neutral at BTIG. The investment firm said that growth still looks strong in the third quarter despite concerns about a weakening consumer.
• NextEra Energy Partners — Shares gained 2.6% after Jefferies initiated coverage of NextEra Energy with a buy rating, saying concerns around $3.75 billion in buyouts that the energy company has to handle are already priced into the stock.

For the full list, read here.

— Pia Singh

SLB stock rises after announcing collaboration with Nvidia

SLB stock rose 2% in early trading after the oilfield services company announced a collaboration with Nvidia on artificial intelligence solutions for the energy sector.

SLB is working with Nvidia to accelerate generative AI models across its digital and data platforms, the companies announced Tuesday. The models will be used for subsurface exploration and production operations as well as data management.

Nvidia CEO Jensen Huang said the models will help industry scientists and engineers optimize energy supplies and innovate clean energy solutions.

"As we navigate the delicate balance between energy production and decarbonization, generative AI is emerging as a crucial catalyst for change," SLB CEO Olivier Le Peuch said.

SLB stock is down more than 7% over the past month and about 20% this year.

— Spencer Kimball

Bank of England holds rates steady

The Bank of England on Thursday announced it would hold interest rates steady. The decision comes a day after the U.S. Federal Reserve opted for an outsized cut of 50 basis points.

The English central bank lowered rates at its August meeting for the first time in over four years.

Following the announcement, the British pound strengthened 0.7% against the dollar at $1.3306.

— Hakyung Kim

Solar stocks rally as traders digest Fed rate cut

Solar stocks were higher Thursday as traders weighed the Fed's decision to cut interest rates by a half percentage point. The Invesco Solar ETF (TAN) rose 2.6% higher. Array Technologies and SolarEdge Technologies led the gains, gaining 7.5% and 5.6%, respectively.

— Fred Imbert

European markets open higher ahead of Bank of England decision

European markets opened higher Thursday as investors digested the U.S. Federal Reserve's first interest rate cut in four years and looked ahead to the Bank of England's rate decision later in the session.

The pan-European Stoxx 600 index was up 1% in opening trade, with all major bourses and virtually all sectors in the green. Mining stocks added 2.02% while telecoms were the sole outlier, down 0.29%.

— Karen Gilchrist

DoubleLine’s Gundlach says he expects more weak data, rate cuts to benefit small caps

DoubleLine Capital CEO Jeffrey Gundlach, who correctly called Wednesday's super-sized rate cut, said he believes the incoming economic data will show more signs of weakness in the U.S.

"I expect to see weaker economic data in coming reports, I still think there's a good shot that the history books will say September 2024 was the start of a recession," Gundlach said on CNBC's "Closing Bell."

As for the market impact from rate cuts, Gundlach believes the easing cycle could provide a bigger boost to small-cap stocks than their large-cap counterparts. That's because much of the S&P 500 companies have fixed-rate debt, while Gundlach estimated that 45% of the Russell 2000 companies, excluding financials, have floating-rate debt.

"I'm pretty sure that this fed cycle will create a much bigger tailwind for the Russell 2000 than the S&P 500," he said.

— Yun Li

Steelcase stock dips 10% on missed revenue expectations

Shares of Steelcase were last trading 10% lower Wednesday night after the furniture manufacturer missed analysts' second-quarter revenue expectations.

Steelcase reported revenue of $855.8 million in its latest quarter while Wall Street analysts had anticipated sales of $864.2 million, FactSet showed. The company also forecast third-quarter revenue in the range of $785 million and $810 million. Analysts had previously expected $812.1 million.

However, Steelcase's second-quarter adjusted earnings of 39 cents per share beat consensus estimates of 37 cents per share.

— Lisa Kailai Han

Stock futures open higher

Stock futures traded higher Wednesday night.

Dow futures rose 85 points, or 0.2%, shortly after 6 p.m. ET. S&P 500 and Nasdaq 100 futures added 0.2% and 0.3%, respectively.

— Lisa Kailai Han