Stock market news/ Wall Street rebound/ Federal Reserve rate cuts/ corporate earnings impact/ bond yields today/ NEW YORK/ Newslooks/ J. Mansour/ Morning Edition/ U.S. stock markets rallied Thursday, with the S&P 500 gaining 1.1% after a sharp selloff spurred by Federal Reserve signals of slower rate cuts in 2025. Strong corporate earnings from Darden Restaurants and CarMax contributed to the rebound, while bond yields remained mixed.
Stock Market Rebounds After Federal Reserve Selloff: Quick Looks
- Major Indexes:
- S&P 500 up 1.1% after a 2.9% drop Wednesday.
- Dow Jones gains 433 points, rebounding from a 1,100-point loss.
- Nasdaq rises 1.1%, recovering some recent losses.
- Corporate Movers:
- Darden Restaurants: Shares surged 12.1% after strong earnings.
- CarMax: Rose 8.2% on better-than-expected quarterly results.
- Micron Technology: Dropped 15.3% on weak revenue forecasts.
- Lamb Weston: Fell 13.8%, citing soft demand for frozen products.
- Economic Indicators:
- U.S. GDP growth revised up to 3.1% in Q3.
- Weekly unemployment claims declined, suggesting a strong labor market.
- Mid-Atlantic manufacturing contracts unexpectedly, highlighting mixed signals.
Wall Street Rebounds After Wednesday’s Major Stock Selloff
Deep Look
U.S. stocks made a strong comeback Thursday following one of the sharpest selloffs of the year. The S&P 500 rose 1.1% in early trading, the Dow Jones Industrial Average climbed 433 points (1%), and the Nasdaq Composite gained 1.1%, recouping about a third of Wednesday’s steep losses.
Federal Reserve’s Impact
Wednesday’s market turmoil came after the Federal Reserve indicated it might deliver fewer interest rate cuts in 2025 than previously anticipated. Fed Chair Jerome Powell cited ongoing economic resilience and inflationary pressures as reasons for the more cautious approach, slowing the pace of rate reductions after aggressive cuts earlier in 2024.
Markets responded Thursday by pricing in the likelihood of just one or two rate cuts in 2025, a sharp shift from expectations of four reductions just a month ago.
Corporate Earnings Bolster Market
Earnings reports played a significant role in stabilizing the market:
- Darden Restaurants: The Olive Garden parent posted better-than-expected profits and raised its revenue outlook, driving shares up 12.1%.
- CarMax: The auto dealer saw its stock climb 8.2% on strong earnings and CEO optimism about stabilizing vehicle prices.
- Micron Technology: Despite reporting a profit beat, shares plunged 15.3% due to weak revenue and soft demand projections.
- Lamb Weston: Shares tumbled 13.8% after the company missed earnings estimates, citing weakening demand for frozen potatoes outside North America.
Bond Market Reaction
Bond yields remained mixed Thursday following a sharp rise earlier in the week. The 10-year Treasury yield edged up to 4.54% from 4.52% on Wednesday, reflecting concerns about higher long-term borrowing costs.
The two-year Treasury yield, which closely follows Federal Reserve policy expectations, dipped slightly to 4.31% from 4.35%.
Higher yields have kept mortgage rates elevated, putting pressure on the housing market. Lennar, a major homebuilder, reported weaker-than-expected earnings, with CEO Stuart Miller citing affordability challenges due to rising interest rates.
Economic Indicators
The U.S. economy showed mixed signals in Thursday’s data:
- GDP Growth: Revised upward to 3.1% for Q3, reflecting strong consumer spending and export growth.
- Unemployment Claims: Weekly claims fell, pointing to continued labor market strength.
- Manufacturing: The Mid-Atlantic region unexpectedly contracted, highlighting uneven growth across sectors.
International Markets
Global markets were mixed amid central bank decisions:
- United Kingdom: The FTSE 100 fell 1% after the Bank of England paused rate cuts, citing persistently high inflation.
- Japan: The Nikkei 225 dropped 0.7% as the Bank of Japan maintained its ultra-loose monetary policy.
- Asia and Europe: Most major indexes ended the day lower, reflecting lingering concerns about global growth.
Outlook
Despite Wednesday’s selloff, the S&P 500 remains near record highs and on track for one of its best years in decades. However, analysts caution that elevated valuations leave little room for error, and markets are increasingly sensitive to signals from the Federal Reserve.
