Market Rebound: Stocks Claw Back Losses After Fed Rate Hike Fears
The US stock market is staging a comeback today, with major indexes recovering about a third of their losses from yesterday’s sharp decline. The S&P 500 surged 1.1% in early trading, while the Dow Jones Industrial Average jumped 433 points, or 1%. The Nasdaq composite also rose 1.1%.
Fed Rate Cut Expectations Shift
The market’s rebound comes after Federal Reserve Chair Jerome Powell warned that the central bank may take a slower approach to cutting interest rates next year. This shift in expectations has led traders to anticipate only one or two rate cuts in 2025, down from earlier forecasts of at least two cuts.
Earnings Boost: Darden Restaurants and CarMax Shine
Darden Restaurants, the parent company of Olive Garden and other chains, saw its stock soar 12.1% after reporting profit that exceeded analysts’ expectations. CarMax also revved up 8.2% after topping profit forecasts, citing a “more stable environment” for vehicle prices.
Mixed Bag: Micron Technology and Lamb Weston Disappoint
However, Micron Technology’s stock tumbled 15.3% despite reporting stronger profit than expected, as revenue fell short of forecasts. Lamb Weston, which makes French fries and other potato products, dropped 13.8% after missing profit and revenue targets, citing soft demand for frozen potatoes.
Bond Market Yields Mixed
In the bond market, yields were mixed, with the 10-year Treasury yield rising to 4.54% and the two-year yield edging back to 4.31%. The rise in longer-term yields has put pressure on the housing market, keeping mortgage rates higher.
Global Markets React
Abroad, London’s FTSE 100 fell 1% after the Bank of England paused its rate cuts, while the Bank of Japan kept its benchmark interest rate unchanged. Indexes also sank across much of Asia and Europe.
US Economy Remains Resilient
Despite the market volatility, reports on the US economy showed mixed results. One report indicated the overall economy grew at a 3.1% annualized rate during the summer, faster than earlier thought. However, a separate report showed manufacturing in the mid-Atlantic region is unexpectedly contracting again.
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