US stock market rallied on Thursday after a better-than-expected unemployment report eased worries about the slowing economy. A surge in Nvidia, Apple, Telsa, Intel and other big tech stocks led to a nearly 3% jump in Nasdaq.

The Dow Jones Industrial Average surged 683.04 points, or 1.76%, to 39,446.49, while the S&P 500 spiked 119.81 points, or 2.30%, to 5,319.31. The Nasdaq Composite ended 464.22 points, or 2.87%, higher at 16,660.02. The Nasdaq 100 surged more than 3%.

Nvidia stock price rallied 6.13%, while Advanced Micro Devices shares surged nearly 5.95%. Intel share price jumped 7.9% and electric vehicle (EV) maker Tesla shares rose 3.69%.

Among other major tech stocks, Apple shares gained 1.66%, Microsoft Corporation stock price rose 1.07%, Amazon shares added 1.86% and Alphabet stock climbed 1.92%.

Other leading gainers on Nasdaq 100 included Ar, Marvell, ON Semiconductor, Microchip, Broadcomm and Qualcomm shares that surged in the range of 6-10%.

Meanwhile, US stock index futures traded higher on Friday. Nasdaq 100 futures rose 0.3%, while futures tied to the Dow Jones Industrial Average were little changed.

The rally in the US stock market comes after the latest jobs data increased investors’ confidence in the economy, calming fears of a US recession.

Initial claims for state unemployment benefits fell 17,000 to a seasonally adjusted 233,000 for the week ended August 3, the largest drop in about 11 months. Economists polled by Reuters had forecast 240,000 claims for the latest week.

Rate cut hopes

Moreover, increased hopes of interest rate cuts by the US Federal Reserve also supported the gains in US stocks.

Fed policymakers are increasingly confident that inflation is cooling enough to allow interest-rate cuts ahead, and they will take their cues on the size and timing of those rate cuts not from stock-market turmoil but from the economic data. That was the shared message of three US central bankers speaking on Thursday, Reuters reported.

“The Federal Reserve faces the daunting task of pulling off a tight balancing act, straddling the polar extremes of a soft landing and a hard recession. New jobless claims data buoyed the markets bringing in some much-needed relief that the economy is not in recession territory, even as the overhang of the Yen Carry trade is receding from the market. To be fair, the Yen carry trade hasn’t been completely unwound yet, however, any more shocks emerging from this front would be restrained, and it seems highly unlikely that its impact will set off another contagion,” said Yogesh Kansal, Co-Founder & CMO, Appreciate.

He believes the Monday market meltdown has also reset the valuation matrix.

“Not just the Magnificent Seven stocks but pharma majors like Eli Lilly and investment banks like JP Morgan Chase would also be a good buy right now. Investors will need to be contrarian in their thinking, at this juncture and resist the impulse towards panic selling. Granted that the coming quarters will be marked with volatility but big tech is still firmly in charge in the US indices, and the action will stay focused on this segment,” Kansal said.

Meanwhile, all eyes in the market will be on the upcoming CPI data to be released on August 14. The next big threat to the market’s recovering bullish sentiment could emerge from the CPI data. Analysts and economists alike are baking in the possibility that it will be on anticipated lines and will continue with the disinflation trend, he added.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

(With inputs from Reuters)