At 14:58 GMT, the Dow Jones Industrial Average is trading 41390.05, up 293.28 or +0.71%. The S&P 500 Index is at 5625.40, up 29.64 or +0.53% and the Nasdaq is trading 17673.15, up 103.47 or +0.59%.

Technically, sentiment should remain bullish as long as the benchmark index remains above the 50-day moving average at 5540.28. The next target is the September 3 main top at 5669.75. This is the last main top before the record high at 5721.25, set on July 16.

According to CME's FedWatch Tool, the probability of a 50-bps rate cut surged to 47%, up from just 14% a day earlier. This shift in sentiment was fueled by comments from former New York Fed President Bill Dudley, who argued that a strong case exists for the Fed to make a larger cut. Adding to the uncertainty, multiple media outlets referred to the decision as a "close call," further suggesting that a more aggressive cut may be possible.

Analysts from Deutsche Bank noted that reports in major financial publications, including The Wall Street Journal and Financial Times, highlighted the possibility of a 50-bps rate cut, prompting traders to adjust their expectations. Previously, markets were anticipating a 25-bps cut following a slightly higher-than-expected U.S. producer price index, which followed the release of August consumer price data.

Bob Savage, head of market strategy at BNY Mellon, emphasized the uncertainty surrounding the upcoming Fed meeting. "Markets want the FOMC to ease fast to address the risk of recession. Regardless of whether the Fed opts for a 25 or 50 bps cut, the decision will be closely scrutinized by investors." Wall Street's key indexes closed higher on Thursday, with gains in large-cap stocks, continuing the market's positive trend for the week.

The Russell 2000, an index of smaller-cap stocks sensitive to economic conditions, surged 1.5%. Additionally, ten of the eleven S&P 500 sectors saw gains, with energy stocks rising 1.20% and materials stocks rising 1.18%, buoyed by stronger precious metals prices.