U.S. equities ended Thursday substantially higher as declining crude prices and Treasury yields created a more supportive backdrop for risk assets. The S&P 500 climbed 1.14%, the Dow Jones Industrial Average gained 0.61%, and the Nasdaq 100 advanced 1.73%.

The rebound followed the Federal Reserve’s 25-basis-point rate increase on Wednesday. While monetary policy remains restrictive, the decision appeared to reinforce confidence that the central bank remains focused on containing inflation. The subsequent decline in Treasury yields provided additional support for equity valuations.

Lower Oil Prices Ease Inflation Pressure

WTI crude oil fell nearly 1% as investors received indications that disruptions to Middle Eastern supply could ease. U.S. Energy Secretary Wright said approximately 18 million barrels of crude and refined products moved through the Strait of Hormuz on Tuesday, helping reduce concerns over an immediate supply shortage.

Saudi Arabia also indicated that it intends to restore roughly half the capacity of its East-West pipeline within days following a shutdown caused by drone strikes. These developments helped reduce some of the inflationary pressure associated with crude oil prices.

The lower energy prices were reflected in the bond market. The 10-year Treasury yield declined to 4.937%, while its breakeven inflation rate fell to 2.303%, the lowest level in four weeks.

Economic Data Sends Mixed Signals

Thursday’s U.S. economic data offered conflicting indications about the path of monetary policy. Weekly initial jobless claims unexpectedly declined by 10,000 to 196,000, reaching an eight-week low and indicating continued labor-market resilience.

At the same time, housing activity weakened. August housing starts fell 2.6% month over month to 1.275 million, while building permits declined 2.7% to 1.394 million. Pending home sales, however, unexpectedly increased 0.3%.

The September Philadelphia Fed business outlook survey fell 9.6 points to 37.8, although the reading remained stronger than the expected 32.1.

Semiconductors and AI Stocks Drive the Rally

Technology shares were among the strongest performers. The semiconductor ETF SOXX gained more than 3%, while Astera Labs rose more than 9%, Arm Holdings advanced over 8%, and Intel gained more than 7%. AMD and SanDisk each rose more than 6%, while Micron Technology gained over 5%.

The major technology companies also participated in the rebound. Tesla, Nvidia and Amazon gained more than 2%, while Microsoft, Alphabet, Meta Platforms and Apple each advanced more than 1%.

Corporate Developments Create Additional Volatility

Individual stocks experienced substantial moves following company-specific announcements. Generac surged more than 18% after agreeing to supply as much as $8 billion of generators for Amazon data centers and issuing Amazon a warrant for an ownership stake.

CoreWeave fell more than 3% after announcing an at-the-market offering program that could involve up to 35 million Class A shares. Fluence Energy dropped more than 15% after cutting its full-year revenue forecast to $2.4 billion from a previous $2.9 billion to $3.1 billion range.

Global Monetary Policy Remains a Key Risk

European bond yields also moved lower, while the Bank of England maintained its benchmark rate at 3.75% in a 6-3 vote. The BOE cautioned that prolonged energy-market volatility could eventually increase inflation pressure and require another rate increase.

Markets are also pricing a 53% probability of a 25-basis-point Federal Reserve increase at the October 27-28 meeting, while expectations for an ECB increase at its October 29 meeting stand at 54%.

What Could Investors Watch Next?

The stock-market rebound now depends on whether lower oil prices and Treasury yields can persist. Continued easing in energy markets could reduce inflation concerns, while resilient employment data could keep pressure on the Federal Reserve to maintain a restrictive stance.

Investors will therefore be watching crude supply developments, Treasury yields, inflation indicators and upcoming central-bank decisions. The performance of semiconductor and AI stocks will also remain important as markets assess whether technology-led gains can broaden across the wider equity market.