US stock market at record high as investors cannot keep calm after Fed rate cut

Wall Street stocks hit record highs as the Federal Reserve cut interest rates to support the labor market. Dow rose 1.3%, S&P 500 1.7% and Nasdaq 2.5%.

Wall Street stocks soared to fresh records Thursday as markets cheered the Federal Reserve's move to aggressively cut interest rates to protect the labor market.

Television stations broadcast Jerome Powell, chairman of the US Federal Reserve, speaking after a Federal Open Market Committee (FOMC) meeting on the floor of the New York Stock Exchange (NYSE) in New York, US.(Bloomberg)

The Dow Jones Industrial Average gained 1.3 percent to 42,025.19, its first close above 42,000.

The S&P 500 also shot to an all-time, surging 1.7 percent to 5,713.64, while the tech-rich Nasdaq Composite Index jumped 2.5 percent to 18,013.98.

"Lower rates are going to be unanimously good for markets," said Art Hogan of B. Riley Wealth Management.

The Fed on Wednesday cut its key lending rate by half a percentage point, opting for the larger reduction after also weighing a quarter-point move.

Stocks fluctuated in the final two hours of trading Wednesday after the Fed decision, with some analysts noting a bit of disappointment over Fed Chair Jerome Powell's guidance not to expect large rate cuts on a regular basis.

But the market's response Thursday was unfettered bullishness, with all three indices in positive territory the entire day.

"The upside moves reflect a belief that the economy is in good shape and the Fed will cut rates as needed to maintain a solid economic backdrop. This morning's data supported this optimistic view," said a note from Briefing.com that pointed to lower jobless claims.

The biggest gainers in the Dow included Apple, Caterpillar, Goldman Sachs and Salesforce. Eight of 11 sectors in the S&P 500 finished higher.