Traders are seen working on the floor of the New York Stock Exchange in New York City.
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The Dow Jones Industrial Average saw a rise on Thursday, marking an end to its 10-day losing streak.
The Dow, consisting of 30 stocks, gained 232 points, equivalent to 0.5%. The S&P 500 increased by 0.4%, along with the Nasdaq Composite.
Shares of the AI powerhouse Nvidia, which had previously dragged down the Dow, surged 2% higher. Financial stocks like JPMorgan Chase and Bank of America also led the stock market’s recovery on Thursday, which benefited sectors such as industrials, healthcare, and utilities.
On Wednesday, stocks experienced a significant drop after the Federal Reserve dealt a serious blow to the surging bull market, indicating that it is likely to slash interest rates only two times in the upcoming year, a reduction compared to the previously anticipated four cuts outlined in September. Although the central bank lowered its benchmark overnight borrowing rate by a quarter percentage point — targeting a range of 4.25% to 4.5% — the focus has now shifted to potential policymaker actions in 2025.
Paul Meeks, co-chief investment officer of Harvest Portfolio Management, mentioned on CNBC’s “Squawk Box” on Thursday that “this correction could extend,” referencing the decline of high-profile name Nvidia. He suggested that investors might want to “keep some powder dry.”
Volatility eased on Thursday, with the Cboe Volatility Index falling more than 16% to around 23. The so-called “fear gauge” reached as high as 28.27 on Wednesday, indicating heightened investor unease regarding interest rate trajectories.
Federal Reserve Chair Jerome Powell offered little reassurance to investors following the Fed’s meeting on Wednesday. He stated, “We’re at 4.3% — that’s meaningfully restrictive, and I think it’s a well-calibrated rate for us to continue making progress on inflation while maintaining a strong labor market,” mentioning that recent rate cuts have allowed the central bank to “act with caution as we consider further adjustments to our policy rate.”
Prior to Wednesday’s rate decision, Wall Street was anticipating a more aggressive Fed stance on reducing borrowing costs, influencing everything from corporate funding to consumer purchasing of homes and cars.
However, following the Fed’s revised outlook, the Dow Jones Industrial Average plunged 1,123.03 points, or 2.58%, settling at 42,326.87. This marked the index’s longest losing streak since 1974, putting it on track for its worst weekly performance since March 2023. The S&P 500 dropped by 2.95%, while the Nasdaq Composite fell by 3.56%.
On Thursday, the yield on the 10-year Treasury bond rose to 4.566% after climbing over 13 basis points to surpass 4.50% following the last Fed meeting of the year.
