NEW YORK: US stock indexes recouped some of the early losses on Thursday, as investors digested the Federal Reserve’s outlook on interest rates amid persistent tariff worries.
Traders looked to build on the previous session’s gains after a massive sell-off in recent weeks due to the uncertainty tied to President Donald Trump’s trade policies. The Fed maintained current interest rates on Wednesday as expected and reaffirmed its forecast for two 25 basis point reductions by the end of year.
The central bank also projected slightly reduced growth and increased inflation for the year, alongside a modest uptick in the unemployment rate by 2025.
All the three major stock indexes closed higher by more than 1% each in the previous session. The CBOE volatility index , also known as Wall Street’s fear gauge, fell 0.3 points and was last at 19.6 - at a nearly one-month low.
Market participants are factoring in 63 basis point cut this year, placing odds of 25 bps rate cut in June at 60%, according to CME Group’s Fedwatch tool.
“The fears have been abated partially by some of Powell’s comments yesterday and in addition, investors are taking a step back after the initial fears and are rethinking that the tariffs are a flexible model and could be removed at any time,” said Andre Bakhos, managing member at Ingenium Analytics.
Analysts said recent economic data that indicated a cooling economy also led to the Fed’s dovish stance.
Despite short-term gains, the S&P 500 along with the Nasdaq have confirmed a 10% drop from their respective record highs - also known as a technical correction.
Global markets have seen significant volatility in recent weeks, as investors worry that Trump’s aggressive trade policies could spur inflation, potentially leading to a recession and disrupting the Fed’s monetary easing cycle.
At 11:20 a.m. ET the Dow Jones Industrial Average rose 179.29 points, or 0.42%, to 42,142.92, the S&P 500 gained 19.70 points, or 0.34%, to 5,694.99 and the Nasdaq Composite gained 86.54 points, or 0.50%, to 17,839.47.
Eight of the 11 S&P 500 sectors advanced with communication services leading with a 1.2% rise.
Growth stocks, which bore the brunt of the recent market rout, gained. Meta gained 4%, Nvidia rose 1.9% and Amazon.com climbed 1.2%.
On the data front, initial jobless claims were largely in line with estimates in the week prior.
A gauge of manufacturing activity in the US mid-Atlantic region rose more than expected in March. The data also suggested increasing price pressures. Darden Restaurants was the latest US company to issue cautious forecasts as a fallout of tariff uncertainty. Its shares rose 6% after the Olive Garden owner forecast quarterly sales above estimates. Accenture fell 6.2% after the consultancy firm said the Trump administration’s efforts to reduce federal spending have led to delays and cancellations of new contracts.
Advancing issues outnumbered decliners by a 1.46-to-1 ratio on the NYSE. and by a 1.29-to-1 ratio on the Nasdaq.
The S&P 500 posted nine new 52-week highs and no new lows while the Nasdaq Composite recorded 20 new highs and 55 new lows.
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