Stocks Open Higher as Investor Mull Fed Rate Cut

Wall Street's main indexes opened slightly higher Thursday as investors parsed a fresh batch of labor market data to gauge the odds of a much-anticipated Federal Reserve interest rate cut when it meets next week.

The Dow Jones Industrial Average rose 5.3 points, or 0.01%, at the open to 47,888.16. The S&P 500 rose 16.8 points, or 0.24%, at the open to 6,866.47​, while the Nasdaq Composite rose 73.2 points, or 0.31%, to 23,527.296 at the opening bell.

U.S. stocks notched their seventh gain in eight sessions on Wednesday, with the S&P 500 and Dow closing at more than three-week high as a soft ADP jobs print and an ISM survey pointing to cooling inflation reinforced bets on a Fed rate cut as soon as next week.

Fresh reads on the labor market are due Thursday, with weekly jobless claims and the Challenger, Gray & Christmas November layoff report scheduled for release. A delayed factory orders report is also expected later in the day.

The Russell 2000 index, which tracks small-caps that tend to thrive in a lower interest-rate environment, currently outperforms the benchmark S&P 500 on a quarterly basis. Futures tracking the index eased 0.17% on the day.

Brokerages Jefferies and BofA Securities have forecast strong earnings growth for smaller companies next year.

"Investors are leaning into the idea that easier policy is coming, which is fueling appetite for risk and lifting everything from blue chips to small caps," said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

Fed funds futures point to an 87% chance that the central bank will cut rates by 25 basis points this month, up from around 60% last month, according to the CME Group's FedWatch Tool.

Investor attention is largely centered on Friday's September Personal Consumption Expenditures report, the Fed's preferred inflation gauge.

It will be the first PCE report since the recent U.S. government shutdown left markets and policymakers with little insight into the U.S. economy.

Traders were also watching developments around U.S. President Donald Trump's selection of the next Federal Reserve chair, in a year of heightened concern over potential political interference in monetary policy.

A report said bond investors have expressed concerns to the U.S. Treasury that Kevin Hassett, a leading contender for the role, might pursue aggressive rate cuts to align monetary policy more closely with President Donald Trump's preferences.

In premarket trading, Snowflake lost 9.2% after the cloud data analytics company's fourth-quarter product revenue forecast fell short of lofty investor expectations for stronger growth.

Salesforce gained 2% after the software maker raised its fiscal 2026 revenue and adjusted profit forecasts, anticipating growth in its artificial intelligence agent platform due to strong enterprise demand.

PayPal lost 1% after brokerage JP Morgan lowered its rating on the fintech company to "neutral" from "overweight."

Hormel Foods gained 4% after the Skippy peanut butter maker forecast annual profit above estimates.

Earnings reports from companies including Dollar General and Kroger are expected before markets open and could offer more insight into the economic health of the American consumer.