US stocks soared on Thursday amid growing optimism that the Federal Reserve's jumbo interest-rate cut will deliver a "soft landing" for the US economy.

The S&P 500 (^GSPC) climbed roughly 1.7%, while the Dow Jones Industrial Average (^IXIC) rose more than 500 points, with both trading around closing record highs. The tech-heavy Nasdaq Composite (^IXIC) led the gains, up 2.2%.

Stocks are rallying as investors take a closer look at the Fed's decision to kick-start its new rate cycle with 50 basis point cut. After Wednesday's policy announcement, the gauges swayed around before closing lower.

Wall Street has absorbed Chair Jerome Powell's message that a deep cut in a relatively strong economy will ultimately fend off the risk of recession — and is a sign of faith, not panic about current conditions.

Bank of America now believes the Fed will go on to cut rates by 0.75% by the end of the year, versus the 0.50% it previously forecast. By comparison, the central bank's own "dot plot" indicates policymakers expect a half-percentage-point reduction.

Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards

Rate-sensitive growth stocks climbed in premarket trading, with Big Tech megacaps that fueled this year's rally making gains. Alphabet (GOOG), Microsoft (MSFT) and Meta (META) were all up roughly 2%, while Apple (AAPL) added over 3%. Tesla (TSLA) and Nvidia (NVDA) rose around 4%.

With the Fed pivot done, some in the market have returned to watching data releases as they brace for potential volatility. A weekly Labor Department report on initial jobless claims on Thursday morning showed a fall to the lowest level in four months. The figure for the week ended Sept. 19 came in at 219,000, while the prior week's total was revised 1,000 higher to 231,000.