Stock Surge Follows Fed's Rate Forecast Revelation

U.S. stocks saw a moderate rise after a sharp decline following the Federal Reserve's forecasts for fewer interest rate cuts and heightened inflation. Economic data supported this stance, with unemployment claims falling and GDP rising. Investors showed cautious optimism as indices recovered slightly on Thursday.

U.S. stocks experienced a moderate rebound on Thursday, recovering briefly from a steep drop after the Federal Reserve projected fewer-than-expected rate cuts amid rising inflation concerns. Economic indicators appeared to support the Fed's outlook, as weekly jobless claims fell, and the third-quarter GDP was revised upward to 3.1% from 2.8%.

Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York, noted that although a bounce-back was anticipated following Wednesday's sell-off, it lacked substantial conviction. This sentiment was reflected as the Dow Jones Industrial Average ascended 235.23 points to 42,561.75, and the S&P 500 and Nasdaq posted gains of 28.11 and 99.50 points respectively.

The Dow neared the end of a ten-session losing streak, its longest since 1974, spurred by the Fed's announcement indicating only two 25 basis point cuts by 2025, down from the previous estimation. Meanwhile, Treasury yields climbed, and volatility eased as investors adjusted expectations.

(With inputs from agencies.)