U.S. stocks rebounded on Thursday, recovering from the steep losses triggered by a hawkish Federal Reserve outlook the day before. The Dow Jones Industrial Average (DJI) gained 0.8%, snapping a 10-session losing streak, while the S&P 500 (GSPC) climbed 0.9%. The tech-heavy Nasdaq Composite (IXIC) rallied over 1% as investor sentiment turned optimistic.
Markets were buoyed by positive economic data and a renewed focus on sectoral strength, even as concerns lingered about the Fed's tempered outlook on interest rate cuts. All 11 sectors of the S&P 500 ended in the green, with Financials and Technology leading the charge.
Market Movers:
- Nvidia (NVDA): Shares of Nvidia surged 3.2% as the semiconductor giant continued to benefit from robust demand for its AI-focused GPUs. Analysts remain optimistic about the company's ability to dominate the AI hardware space, particularly as demand for high-bandwidth memory chips soars.
- Micron Technology (MU): Micron's stock plummeted 16.6% following disappointing revenue guidance for the upcoming quarter. The memory chipmaker highlighted slumping mobile chip sales, offset only partially by growth in AI-related products. Investors remain concerned about the broader slowdown in traditional chip sales despite the AI boom.
- Amazon (AMZN): Amazon rose 2.1%, fueled by optimism about holiday sales and cloud growth prospects. The company's focus on efficiency and strategic investdments in AI capabilities has kept it a favorite among large-cap growth investors.
Economic Growth Exceeds Expectations
According to the Bureau of Economic Analysis's latest revision, the U.S. economy grew at an annualized rate of 3.1% in the third quarter. This marks an upward adjustment from the prior estimate of 2.8% and reflects stronger consumer spending and business investment. The robust GDP figures suggest resilience in the face of higher borrowing costs.
Additionally, weekly jobless claims fell to 220,000, a drop from the previous week’s 242,000. The labor market’s strength continues to underpin economic momentum, though some analysts caution that tighter monetary policy could weigh on hiring in the coming months.
Sector Performance and Market Sentiment
All 11 sectors of the S&P 500 ended the day in positive territory, with Financials and Utilities leading the charge. Technology stocks also rebounded, supported by gains in mega-cap names like Microsoft and Apple. This broad-based rally suggests improving investor sentiment as markets digest the Fed’s messaging.
Despite Thursday’s recovery, some strategists warn of ongoing volatility as markets contend with uncertainties around inflation, corporate earnings, and geopolitical risks. The cautious optimism reflects a balancing act between economic resilience and potential headwinds.
Looking Ahead
Investors will closely watch upcoming economic data, including December’s inflation report and consumer spending trends during the holiday season. Corporate earnings for the fourth quarter will also be pivotal in shaping market direction as companies reveal their outlooks for 2025.
With the Fed maintaining a data-dependent approach, market participants are bracing for potential surprises in the central bank’s path forward. For now, Thursday’s gains signal a temporary reprieve as Wall Street eyes a steadier footing heading into the new year.