US stocks bounce back on renewed rate cut optimism

Wall Street stocks rebounded early Friday after a Federal Reserve official's remarks reignited hopes of a third consecutive US interest rate cut in December.
The Dow Jones Industrial Average added 0.6 percent to 46,002.50, while the broad-based S&P 500 bounced 0.4 percent to 6,565.51.

The tech-heavy Nasdaq Composite Index advanced 0.3 percent to 22,140.03.


All three indexes had retreated late Thursday on fears of an artificial intelligence bubble and rate cut worries.

But shortly before trading started on Friday, New York Fed President John Williams told a conference in Chile that he still sees room for a further rate reduction "in the near term."

His comments came after a delayed report on the US labor market indicated stronger hiring in September even though unemployment inched up.

The report added to market expectations that the Fed could wait longer to cut rates as it keeps an eye on stubborn inflation -- pouring cold water on hopes of a December rate cut.

Williams "has a big voice" on the Fed's rate-setting committee, said Art Hogan of B. Riley Wealth Management.

"That matters because I think the diminished potential for a rate cut in December really moved into full force over the course of the last three days," Hogan added.

For now, spirits have been lifted even if it remains to be seen if the positive tone is sustained, analysts said.

Among individual companies, shares in AI bellwether Nvidia were still down around 0.7 percent in early trading.

Chip company Advanced Micro Devices also saw its shares drop 0.9 percent.