The S&P 500 and Nasdaq Composite rallied on Thursday, clawing back part of the prior session's Fed-driven losses as Treasury yields and oil prices fell. Tech and industrial names led the advance a day after the Federal Reserve raised interest rates for the first time in three years.
The S&P 500 gained 1.1% on Thursday, while the Nasdaq Composite added 1.6% and the Dow Jones Industrial Average advanced 363 points, or 0.7%. The gains marked a bounceback from Wednesday's sell-off, triggered after the Fed raised the overnight federal funds rate by a quarter percentage point. It was the central bank's first interest rate hike in three years.
Yields and oil retreat, easing pressure on stocks
Falling Treasury yields and oil prices gave equities room to recover. The 10-year Treasury yield dropped more than 5 basis points to 4.945%, moving back below the 5% level it had climbed above a day earlier. At the same time, U.S. crude fell 1% to around $100 a barrel while Brent slid 2% to about $103, as supply concerns eased after Saudi Arabia reportedly moved to make more crude available to Asian refiners through ship-to-ship transfers near Oman's Sohar port.
The Russell 2000 also tacked on 1%, Investor's Business Daily reported. The S&P 500 and Nasdaq both reclaimed their 50-day moving averages in the session.
Investors read Fed hike as removing uncertainty
Fed Chairman Kevin Warsh signaled a day earlier that another hike could come this year, saying inflation remains too high. Yet the mood shifted on Thursday as investors moved past the decision itself. According to CNBC, Robert Conzo, CEO at The Wealth Alliance, said the reaction "could be kind of summed up in one word: relief."
Conzo added that the market still faces the possibility of extreme volatility depending on how the Middle East conflict unfolds, since elevated oil prices could keep inflation harder to slow.
Tech and industrials drive the advance
"Magnificent Seven" names led the charge. Nvidia and Amazon each rose 2%, while Microsoft gained 1%. Other AI-linked chipmakers moved further: Qualcomm advanced 2% and Intel jumped 9%. Beyond tech, Caterpillar climbed more than 2%, adding industrial momentum to the rally.
By early afternoon, the S&P 500 traded near 7,635.25 points, the Nasdaq Composite near 26,396.29, and the Dow near 51,800.56, Investing.com reported. Truist chief market strategist Keith Lerner said markets had priced roughly a 90% probability of the hike beforehand, adding that investors were now looking past the rhetoric toward falling long-term yields.
Sources: CNBC, Investor's Business Daily, Investing.com
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