The Dow snapped its 10-day losing streak Wednesday, as an early rebound from a sharp drop in the prior session after the Federal Reserve forecast fewer-than-expected interest rate cuts and higher inflation next year.
The Dow Jones Industrial Average, which jumped as much as 461 points, finished up 15.37 points at 42,342.24. The blue-chip index’s 10-session losing streak was its longest since 1974.
The S&P 500 and Nasdaq both slipped 0.1%.
Dow is on track to snap its 10-session losing streak, its longest since 1974. Getty ImagesThe Dow and S&P 500 suffered their biggest one-day percentage drop since early August, while the Nasdaq suffered its biggest daily fall since July after the Fed on Wednesday said it expects to make just two 25 basis point cuts in 2025, half a percentage point less than its September forecast for the first year of the new Trump administration.
Economic data seemed to back up the Fed’s view, with weekly initial jobless claims falling more than expected while gross domestic product for the third quarter was revised to show a 3.1% increase from the previously reported 2.8% pace.
“It clearly sent a message that rates weren’t going to keep going down if inflation didn’t continue its decline, and we’ve seen inflation tick up a bit here, and that’s a concern to the Fed,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
“Today you would have expected, given the sell-off and the sharpness of it, you’d see a bounce today, and we are seeing one, it just isn’t with a lot of conviction here.”
Jerome Powell’s Fed said it expects just two rate cuts in 20025. AFP via Getty ImagesTraders now see just one quarter-point rate reduction by mid-2025, and see less than two cuts in total by the end of the year, compared with last week’s expectations of three rate cuts.
Longer-dated Treasury yields were higher after the economic data, with the benchmark 10-year note reaching a near 7-month high of 4.594%.
The CBOE volatility index, Wall Street’s fear gauge, eased to 23.22 points after hitting a five-month high of 28.32 a day earlier.
Data on Thursday showed the US economy grew faster than previously estimated in the third quarter, while weekly jobless claims fell more than expected last week. APBank stocks rose 0.6% as a rise in yields tends to improve the profitability of lenders, while the incoming Trump administration is expected to loosen regulations on the sector.
Micron slumped 16% following its forecast of quarterly revenue and profit below estimates.
Homebuilder Lennar lost 5.2% after reporting fourth-quarter results below estimates, pulling the PHLX housing index down by 2.1%.
