The S&P 500 surged to a record high close Thursday, the day after the Federal Reserve cut interest rates by 50 basis points and indicated more rate cuts were on the horizon.

Heavyweight stocks that have enjoyed much of this year's stock market rally made fresh gains, with Tesla, Apple and Meta Platforms up sharply.

AI powerhouse Nvidia rallied, helping lift the PHLX semiconductor index.

Better-than-expected jobless claims data further stoked global risk appetite.

On Wednesday, the Federal Reserve announced a rate cut at the high end of expectations, and said it had greater confidence inflation was under control. Fed Chair Jerome Powell said the U.S. economy remained strong and the central bank would decide on the appropriate pace of future rate cuts.

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"The Fed has sanctioned a pretty strong economic picture here, and so we're just seeing the money flow back into some of the sectors that have perhaps underperformed so far this quarter," said James Ragan, Director of Wealth Management Research at D.A. Davidson.

The small-cap Russell 2000 index rose as lower interest rates boosted prospects of reduced operating costs and greater profits.

According to preliminary data, the S&P 500 gained 94.95 points, or 1.69%, to end at 5,713.21 points, while the Nasdaq Composite gained 440.68 points, or 2.49%, to 18,011.51. The Dow Jones Industrial Average rose 526.98 points, or 1.27%, to 42,028.54.

BofA Global Research said it now expects a total of 75 basis points in rate cuts by the end of this year, steeper than its previous forecast of 50 bps.

Evercore ISI data going back to 1970 showed the S&P 500 has posted an average 14% gain in the six months following the first reduction of a rate-cutting cycle.

September has generally been a disappointing month for U.S. equities with the S&P 500 notching an average loss of 1.2% since 1928.

The S&P 500 banks index rose, with gains in Citigroup and Bank of America after they lowered their respective prime rates.

Fertility benefits management firm Progyny plunged after a significant client notified the company it had elected to exercise a 90-day option to terminate its services agreement.