Tech leads US stocks to higher close as oil eases, Treasury yields dip

On September 17, Wall Street experienced a significant rebound as oil prices eased, US Treasury yields dropped, and labor data remained solid, enabling markets to move past the Federal Reserve's first interest rate hike in over three years. All three major U.S. stock indexes closed higher, with the Nasdaq leading the charge. Robert Pavlik, a senior portfolio manager at Dakota Wealth, noted increased investor interest in sectors affected by the anticipation of the Fed's rate hike.

Crude oil prices dropped to a one-week low after concerns of supply disruption eased due to reports of Saudi oil moving through Oman. While oil prices fell, the Middle East remained tense. The Fed raised the Fed funds target rate for the first time since July 2023, signaling a commitment to bring inflation back to its 2% goal, paving the way for further rate hikes in 2026.

Market participants appeared relieved by the Fed's unity and Chair Jerome Powell's reaffirmation of the central bank's independence. Financial markets now anticipate a 53.1% chance of another rate hike at the Fed's October meeting, up from 27.2% the previous week. The Labor Department reported that initial jobless claims dipped to near-1969 lows, reinforcing the notion of a strong U.S. economy.

The CBOE Market Volatility Index, known as the "fear index," hit its lowest level in over a week, coinciding with the drop in crude prices. The Dow Jones Industrial Average climbed 317.95 points (0.62%), the S&P 500 added 85.93 points (1.14%), and the Nasdaq Composite surged 439.87 points (1.69%). Tech stocks were the top gainers among the 11 major sectors of the S&P 500, while financials and consumer staples were the only two sectors to close lower.

Gold and silver miners, as well as chip stocks, outperformed the market, with both advancing over 3%. Homebuilders also saw gains after housing data revealed increased single-family housing starts and pending home sales in August. Interest rate-sensitive banks stabilized after a 2.3% selloff on September 16. The index ended the day up 0.2%.

Cryptocurrency-linked stocks rose following the U.S. Securities and Exchange Commission's announcement of a five-year exemption for tokenized stock trading, with Circle Internet Group and Robinhood leading the gains. Conversely, CoreWeave declined 4.2% after announcing plans to raise capital through stock and convertible bond offerings, and Fluence Energy fell 15.4% after cutting its revenue forecast for fiscal year 2026.

Advancing issues outnumbered decliners on the NYSE 2.38-to-1, while 3,274 stocks increased and 1,483 declined on the Nasdaq. Over 12 stocks hit new 52-week highs and 20 new lows on the S&P 500, and the Nasdaq Composite recorded 60 new highs and 127 new lows. US exchanges saw a volume of 17.57 billion shares, surpassing the 15.37 billion average for the full session over the past 20 trading days.