Wall Street's major indexes rebounded somewhat on Thursday, a day after the Federal Reserve's predictions of lower-than-expected interest rate cuts and higher inflation next year misled some investors and sent U.S. stocks tumbling.
In morning trading, the Dow Jones Industrial Average rose 237 points, or 0.6%, to $42,563.
The S&P 500 rose 0.4% and the Nasdaq rose 0.5%.
The Dow Jones Industrial Average is on track to end its longest 10-session losing streak since 1974.
The benchmark S&P 500 index was at its lowest level in nearly a month on Wednesday as investors adjusted their risk exposures to reflect the impact of higher borrowing costs in 2025.
The Federal Reserve said Wednesday it expects to cut interest rates by just two 25 basis points in 2025, 0.5 percentage points lower than expected in September, raising inflation expectations for the first year of the new Trump administration and raising expectations for a major The stock index rose to its highest value. It has been decreasing every day since August.
Traders now expect only one quarter-point rate cut by mid-2025, resulting in fewer than two cuts in total by year-end, compared to last week's forecast of three cuts. .
The CBOE Volatility Index, Wall Street's fear gauge, fell to 20.56 points from the previous day's four-month high of 28.32, while the small-cap Russell 2000 index rose 1.3%.
Most mega-cap and growth stocks recovered to some extent, with Tesla and Alphabet gaining 2% and 1.7%, respectively.
“Markets tend to 'fall and then rise,' but investors don't want to be overexposed over the weekend, so I wouldn't be surprised if they ended up giving back much of their gains at the end of the day,” he said. said. Sam Stovall, chief investment strategist at CFRA Research, said:
The Fed's hawkish turn comes just three months after the central bank began a monetary easing cycle with a larger-than-usual 50 basis point cut in interest rates, stimulating risk appetite and sending Wall Street into a tailspin. He helped push it to record levels.
“If the Fed continues to raise interest rates for a while, that could put inflation back on a downward trajectory and be positive for (the market) this year,” Stovall said.
Meanwhile, data showed the U.S. economy grew faster than previously expected in the third quarter, but weekly jobless claims fell more than expected last week, reflecting a gradual cooling of labor market conditions. They match.
Micron fell 17% after the company reported lower-than-expected quarterly sales and profits.
IT services provider Accenture rose nearly 7.2% after its first-quarter revenue beat Wall Street expectations, while homebuilder Lennar fell 4.5% after reporting fourth-quarter results that fell short of expectations.
Vertex Pharmaceuticals fell 10% after the company announced that its experimental non-opioid drug showed little difference in pain relief from a placebo in a mid-term trial.
