Wall Street’s main indexes notched some gains on Thursday, a day after the Federal Reserve cut interest rates less than expected and projected higher inflation next year, disappointing some investors and sending U.S. stocks lower.
In morning trading, the Dow Jones Industrial Average rose 237 points, or 0.6%, to 42,563.
The S&P 500 gained 0.4% and the Nasdaq gained 0.5%.
The Dow is on track to snap its 10-season losing streak, its longest since 1974.
The benchmark S&P 500 hit a nearly one-month low on Wednesday as investors adjusted their risk exposure to reflect the impact of higher borrowing costs in 2025.
The Fed said on Wednesday it expects only two 25 basis point cuts Inflation in 2025 was half a percentage point below the September forecast and expectations for the first year of the new Trump administration rose, sending the three main stock indexes to their sharpest daily declines since August.
Traders now expect only a quarter-point rate cut by mid-2025, and less than two overall by the end of the year, compared with last week’s expectation of three rate cuts.
The CBOE Volatility Index, Wall Street’s fear gauge, eased to 20.56 points from a four-month high of 28.32 a day earlier, while the small-cap Russell 2000 was up 1.3%.
Most megacaps and growth stocks gained some ground, with Tesla and Alphabet leading the way with gains of 2% and 1.7%, respectively.
“The market tends to bounce back after a dip but I wouldn’t be surprised if we give back most of the profits at the end of the day because investors don’t want to be overexposed over the weekend,” he said. Sam Stovall, chief investment strategist at CFRA Research.
The drastic change from the Fed comes just three months after the central bank began its monetary easing cycle with an interest rate cut by 50 basis points more than usual, which increased risk appetite and sent Wall Street trading to record highs. Helped to push on.
“If the Fed stays at higher levels for a while, that could push inflation back down and allow for a positive year (for the market),” Stovall said.
Meanwhile, data showed the US economy grew faster than previously estimated in the third quarter, while weekly jobless claims fell more than expected last week, in line with a gradual cooling in labor market conditions.
Micron fell 17% after reporting quarterly revenue and profit that fell short of estimates.
Accenture gained about 7.2% as the IT services provider beat Wall Street estimates for first-quarter revenue, while homebuilder Lennar dropped 4.5% after reporting fourth-quarter results below estimates. .
Vertex Pharmaceuticals fell 10% after the company said its experimental non-opioid drug showed little difference compared to placebo in reducing pain in a mid-stage study.
