Wall Street took a break Thursday from worrying about interest rates and inflation to revert to a tried-and-true investment idea: snapping up shares of companies tied to artificial intelligence.

A rally in tech stocks from chip makers to the Magnificent Seven giants to data storage companies led U.S. stock indexes higher Thursday, bringing relief to investors after a rough stretch in which stocks tumbled and the 10-year Treasury yield reached its highest level since 2007.

On Wednesday, the Federal Reserve moved to raise rates for the first time in three years. Stocks ended the session lower for the seventh time in the past eight sessions. But by Thursday morning, investors were coming to terms with higher rates-and returning their attention to companies, future corporate earnings and, of course, the state of the build-out in AI.

"This is really a good relief rally," said Mary Ann Bartels, chief investment strategist at Sanctuary Wealth. "My sense is that even if the Fed raises one more time, the earnings are strong enough and the valuations aren't stretched enough to really take the market down a lot."

The Nasdaq composite gained 1.7%, with the gains putting the index into the green for the month. The S&P 500 rose 1.1%, and the Dow Jones Industrial Average added 0.6%, or about 316 points.

Both the Nasdaq and the S&P 500 posted their biggest one-day gains since Aug. 4.

Advanced Micro Devices rose 6.4%, Sandisk gained 6.2%, Micron Technology added 5.5% and Marvell Technology climbed 4.8%. The Magnificent Seven tech behemoths-Alphabet, Amazon.com, Apple, Meta Platforms, Microsoft, Nvidia and Tesla-all rose at least 1.3%.

Fed officials on Wednesday penciled in at least one more increase this year, and Fed Chairman Kevin Warsh reiterated his concern about inflation, causing investors to bet on even more rate increases over the next several months.

"There's a sense of relief of just knowing what actually we're dealing with by now," said David Stubbs, chief investment strategist at AlphaCore Wealth Advisory. The Fed, he added, is likely just going to hike rates a couple more times, which is "manageable as long as they're not dealing with an inflation situation like we had coming out of Covid."

A decline in oil prices for the second straight day also helped take the pressure off bonds, with the 10-year yield slipping to 4.946% from 5.003% the prior day, according to Tradeweb. The price of Brent crude, the international benchmark, fell nearly 1% to $104.82 a barrel on hopes that disruption to exports via a damaged Saudi pipeline may not be as severe as initially feared.

The gains were broad, with everything from gold to bitcoin to shares of tech companies rising.

Even stocks sensitive to the economy's ups and downs, including those that typically suffer when the Fed hikes rates, rose on Thursday. The Russell 2000 index of smaller stocks added more than 0.5%, while an index tracking the railroads, airlines and trucks transporting the goods and raw materials that power the U.S. economy climbed 0.5%.

Strong corporate earnings and a resilient jobs market have given investors confidence that the economy won't buckle under higher borrowing costs. Companies in the S&P 500 are expected to see profits jump around 32% this year from 2025, according to FactSet.

Elsewhere, fresh data from Freddie Mac showed that 30-year fixed rates averaged 6.95% this week, up from 6.76% last week and the highest since January 2025.