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U.S. stocks rebounded modestly on Thursday, dispelling some of the gloom from the previous day’s hawkish Federal Reserve that spooked stock prices around the world.
The S&P 500 index rose 0.7% in morning trading, suggesting investors see the previous day’s nearly 3% decline – the worst day since the market crash in early August – as an opportunity to bet on previous wins. did.
“Every dip is a buying opportunity right now,” said Steve Sosnick, chief global strategist at Interactive Brokers. “You could say the sell-off was overdone, but when you see the market recover… it just goes to show that traders are programmed to buy on dips regardless of the reason.”
The Nasdaq Composite Index, which is heavy on tech stocks, rose 0.7% after falling 3.6% the previous day. The Magnificent Seven large-cap tech stocks, whose gains powered much of the S&P 500’s 24% rise this year, all rose in early trading.
Thursday’s rise in U.S. stocks was in contrast to markets in Europe and Asia, which fell after Wednesday’s decline in U.S. stocks and remained soft despite an improvement on Wall Street.
On Thursday, the European benchmark Stoxx600 fell 1.6%, while Britain’s FTSE 100 fell 1.3%. Earlier, markets in India, Japan, South Korea and Hong Kong also closed in the red.
The Fed lowered interest rates by a quarter of a point on Wednesday, as expected, but raised its 2025 inflation forecast and lowered expectations for further rate cuts, spooking investors. This was the central bank’s last meeting before President-elect Donald Trump takes office next month.
Meanwhile, the dollar held steady on Thursday after surging to its highest level since November 2022 relative to a basket of peers following the Fed’s policy meeting.
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The strong dollar has particularly hit emerging market currencies, with the Indian rupee hitting an all-time low of 85.1 rupees against the dollar. The Chinese yuan depreciated and the South Korean won fell to its lowest level in 15 years.
“The Fed interest rate backdrop will put further pressure on emerging markets,” said Robin Gilhooly, senior emerging markets economist at Abdon. “Next year will be off to a tough start for emerging markets. . . But the contours of U.S. policy will not be clear for some time.”
Concerns that inflation could stall above 2% led Fed officials to forecast a rate cut of just 0.5 percentage point in 2025, a complete decline from their previous forecast in September. Fixed.
In the bond market, the benchmark 10-year government bond yield rose a further 0.07 percentage point to 4.57%, its highest level in six months, after rising sharply on Wednesday.
“Given stagnant inflation and downside risks to growth, the Fed acknowledges the economy is in ‘very good shape’ and seriously questions how much further rate cuts will be necessary,” said global head Chris Turner. There has been a change in direction.” ING market.
