To The Moon

Wall Street staged a sharp rebound on September 17, just one day after the Federal Reserve raised interest rates for the first time in more than three years.

The $S&P 500(.SPX)$ gained 1.14% to 7,637.76, while the $NASDAQ(.IXIC)$ Composite jumped 1.69% to 26,418.30, giving both indexes their strongest session in roughly six weeks. The $Dow Jones(.DJI)$ rose 0.61% to 51,778.04, while the Russell 2000 added about 0.6%.

The rebound came despite the Fed raising its benchmark rate by 25 basis points to 3.75%–4.00% and signaling that more tightening could follow. Instead, investors found relief in two developments: Treasury yields retreated and oil prices eased, allowing technology and AI-related stocks to bounce sharply.

1. Treasury Yields Ease — Giving Growth Stocks Room to Recover

One of the biggest catalysts was the bond market.

The 10-year Treasury yield fell to around 4.93%, retreating from above the closely watched 5% level.

That matters particularly for technology and growth stocks. Higher yields increase the discount rate applied to future earnings, making expensive long-duration stocks less attractive. When yields retreat, some of that valuation pressure disappears.

That was exactly what happened Thursday. The $S&P 500(.SPX)$’s technology sector led the market higher as investors returned to rate-sensitive growth names.

So the rally did not necessarily mean investors stopped worrying about higher rates. Rather, long-term borrowing costs stopped moving against equities.

2. Tech and Semiconductors Lead the Comeback

Technology quickly regained market leadership.

Large-cap technology names advanced, while semiconductor stocks delivered some of the session’s strongest moves. $NVIDIA(NVDA)$ rose roughly 2.5%, $Advanced Micro Devices(AMD)$ gained more than 6%, $Micron Technology(MU)$ climbed more than 5%, and $Intel(INTC)$ surged nearly 8%.

The strength in chips helped push the $NASDAQ(.IXIC)$ sharply higher and showed investors were willing to return to the AI trade once pressure from bond yields eased.

This also highlights how concentrated market leadership remains. Because mega-cap technology and semiconductor companies carry large index weights, a strong rebound in AI-related stocks can quickly lift the broader $S&P 500(.SPX)$ and Nasdaq.

3. Lower Oil Removes Another Inflation Pressure

Oil also moved in the market’s favor.

Brent crude fell about 1% to $104.82 per barrel, helping ease some of the inflation anxiety that had weighed on markets earlier in the week.

High oil prices create two problems for equities. They can keep inflation elevated—potentially encouraging the Fed to remain restrictive—and they raise transportation and operating costs for businesses while reducing consumers’ purchasing power.

Lower oil therefore gave investors another reason to look past Wednesday’s initial post-Fed selloff.

The combination of falling oil prices and easing Treasury yields created a much friendlier environment for equities than markets faced immediately after the rate decision.

4. The Labor Market Still Looks Resilient

Economic data also suggested the U.S. economy remains relatively firm.

Initial unemployment claims fell to around 196,000, indicating layoffs remain limited despite restrictive monetary policy.

That is supportive for corporate earnings and consumer spending, but it comes with a trade-off: a resilient labor market also gives the Fed more room to focus on inflation rather than rushing to support growth.

That means good economic data can currently be both positive for stocks and potentially hawkish for rates.

5. Did Stocks Really Shake Off the Fed?

Not entirely.

The Fed still raised rates to 3.75%–4.00%, inflation remains above target and policymakers have indicated that another increase could come before year-end.

Thursday’s rally therefore should not be interpreted as the market suddenly deciding that Fed policy no longer matters.

Instead, investors appear to be separating two issues:

Monetary policy: rates may remain higher for longer.

Financial conditions: lower Treasury yields and cheaper oil reduce some of the immediate pressure on equity valuations.

Thursday was largely a reaction to the second.

A Fed hike does not automatically mean stocks must fall. Markets continuously weigh rates alongside earnings, inflation, growth, oil prices and bond yields. On Thursday, enough of those factors moved in a positive direction to overpower the immediate concern around tighter policy.

What Investors Should Watch Next

The rally was strong, but whether it continues will depend on several signals.

The first is the 10-year Treasury yield. Staying below 5% would provide relief for growth stocks, while another surge could quickly bring valuation pressure back.

The second is oil. Continued declines would ease inflation concerns, while another energy spike could strengthen the case for further Fed tightening.

The third is market breadth. Thursday’s advance was heavily driven by technology and semiconductors. A more durable rally would ideally see stronger participation from other sectors as well.

And finally, inflation remains the central variable. As long as price pressures stay elevated, each inflation report, labor release and move in Treasury yields could significantly influence expectations for the next Fed decision.

The Bigger Picture

The $S&P 500(.SPX)$ and $NASDAQ(.IXIC)$ posted their best day in six weeks not because the Fed suddenly turned dovish, but because oil fell, Treasury yields eased and technology stocks came roaring back.

Thursday showed that equities can still rally in a higher-rate environment if other financial conditions improve.

The bigger question now is:

Can stocks keep climbing if rates stay higher for longer—or was Thursday mainly a relief rally fueled by falling yields and oil?

That debate could define the next phase of the market.

🪙 POLL | What’s Really Driving This Rally?

The Fed just hiked rates, yet the S&P 500 and Nasdaq still posted their strongest gains in six weeks.

Which factor matters most for the next leg of the market?

A. 📉 Treasury yields keep falling
B. 🛢️ Oil prices continue to cool
C. 💻 Tech and semiconductors stay strong
D. 🏦 The Fed turns less hawkish

💬 Vote below and tell us why.
Do you think this is the start of a stronger rally, or is the market simply enjoying a short-term rebound?

🎁 Useful comments and thoughtful market views can earn Tiger Coins!

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