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US weekly jobless claims rise moderately

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Fed cuts rates by 25 bps

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JP Morgan, Goldman weigh on Dow

(Recasts with preliminary closing details, adds comments by

U.S. Fed chief)

By Chuck Mikolajczak

NEW YORK, Nov 7 (Reuters) - U.S. stocks closed higher on

Thursday, after the Federal Reserve announced a cut of 25 basis

points (bps) in interest rates, extending a sharp rally sparked

by Donald Trump's return as U.S. president.

The Fed cut interest rates by a quarter of a percentage

point as policymakers took note of a job market that has

"generally eased" while inflation continues to move toward the

U.S. central bank's 2% target.

Markets had almost fully priced in a 25-basis-point rate cut

for the November meeting and will now eye upcoming commentary

from the central bank for guidance about the path of monetary

policy.

Investor expectations that Trump would lower corporate taxes

and loosen regulations sparked a surge in each of the three

major indexes in the prior session, with both the Dow

Industrials and S&P 500 recording their largest one-day

percentage jumps in two years.

"In an action-packed week, the Fed didn't add any drama.

Cutting by 25 basis points still keeps the federal funds rate

restrictive, but not as restrictive as it was," said Brian

Jacobsen, chief economist at Annex Wealth Management in

Menomonee Falls, Wisconsin.

"Elections have consequences and we could see a marginal

improvement in growth relative to their forecasts, but also a

marginal increase in inflation relative to their forecasts. That

would call for a more gradual pace of rate reductions."

According to preliminary data, the S&P 500

gained 44.84 points, or 0.76%, to end at 5,973.88 points,

while the Nasdaq Composite gained 285.89 points, or

1.51%, to 19,269.46. The Dow Jones Industrial Average

fell 2.67 points, or 0.01%, to 43,727.26.

Communications services led S&P sector gains,

buoyed by a jump of more than 10% in Warner Bros Discovery ( WBD )

after a surprise third-quarter profit.

Financials were the weakest of the 11 major S&P

sectors, giving back some of the outsized gains in the prior

session, as banks declined after a surge of nearly 11%

on Wednesday. JP Morgan and Goldman Sachs ( GS ) shares

both fell to weigh on the Dow.

Expectations for continued rate cuts have been dialed back,

however, as economic data continues to point to a resilient

economy and the potential for higher inflation as a result of

likely tariffs and increased government spending under Trump's

administration.

Fed Chair Jerome Powell said no decision has been made on

what sort of policy action the central bank will take in

December but the central bank is "prepared to adjust our

assessment of the appropriate pace and destination" for monetary

policy amid uncertainty.

Investors are also eying whether Republicans could win

control of both houses of Congress, making it easier for Trump's

agenda to proceed.

Treasury yields, which have surged in recent weeks,

retreated after a sharp rise on Wednesday, as the benchmark

10-year yield eased from a four-month high of

4.479%, before briefly paring declines slightly after the Fed

statement before turning lower again.

Data earlier on Thursday showed U.S. weekly jobless claims

rose marginally last week, suggesting no material change in

labor market conditions.