Stocks rebounded Thursday from a 500-point loss in the Dow Jones Industrial Average as investors bet the Federal Reserve was done hiking interest rates.
The Dow Jones Industrial Average added 225 points, or 0.7%. The S&P 500 rose 0.9%, and the Nasdaq Composite advanced by 1.2%.
The Fed’s decision and subsequent comments by Chair Jerome Powell at the conclusion of the policymakers’ two-day meeting on Wednesday weighed on stocks.
The central bank raised rates by 25 basis points, as expected. It also hinted that its inflation-fighting tightening campaign could be nearing the end, with the removal of the phrase “ongoing increases” from its statement. While Powell said that “rate cuts are not in our base case” for the remainder of 2023, traders priced in expectations of the central bank lowering rates this year.
“The Fed has to really thread the needle carefully given the current bank sector situation, as well as other economic data, that is underscoring it’s not just a problem on Wall Street weighing on the markets,” said Greg Bassuk, CEO at AXS Investments.
“We’re [also] seeing a problem on Main Street where it’s getting harder for consumers to borrow money and other downstream implications that are making it hard. As we always say, not only at the boardroom table, but also at the kitchen table,” Bassuk added.