NEW YORK (AP) — U.S. stocks are stabilizing Thursday following one of their worst days of the year, and indexes are clawing back about a third of those losses.
The S&P 500 rallied 1.1% in early trading, a day after tumbling 2.9% when the Federal Reserve said it may deliver fewer cuts to interest rates next year than earlier thought. The Dow Jones Industrial Average was up 433 points, or 1%, as of 9:35 a.m. Eastern time, following Wednesday’s drop of more than 1,100 points. The Nasdaq composite rose 1.1%.
Indexes are still near their records, and the S&P 500 is still on track for one of its best years of the millennium. Wednesday’s drop just took some of the enthusiasm out of the market, which critics had already been warning was overly buoyant and would need everything to go correctly for it to justify its high prices.
Traders are now expecting the Federal Reserve to deliver just one or maybe two cuts to interest rates next year, according to data from CME Group. A month ago, the majority saw at least two cuts in 2025 as a safe bet.
Fed Chair Jerome Powell warned Wednesday that a still-resilient economy and upward pressure on inflation mean the central bank will likely take it slower on rate cuts next year. It’s a shift after the Fed had been quickly cutting its main interest rate from a two-decade high in September.
Wall Street loves lower interest rates because they give the economy a boost and goose prices for investments, but they can also provide fuel for inflation. And the S&P 500 had already set an all-time high 57 times so far this year because of expectations that the Fed would keep delivering cuts to rates in 2025.
Darden Restaurants, the company behind Olive Garden and other chains, helped lift the market Thursday after leaping 12.1%. It delivered profit for the latest quarter that edged past analysts’ expectations. The operator of LongHorn Steakhouses also gave a forecast for revenue for this fiscal year that topped analysts’.
CarMax revved 8.2% higher after likewise topping analysts’ expectations for profit in the latest quarter. CEO Bill Nash said the auto dealer benefited from “a more stable environment” for vehicle prices.
Amazon shares added 1.6%, even as workers at seven of its facilities went on strike Thursday, right in the middle of the online retail giant’s busiest time of the year. Amazon says it doesn’t expect an impact on its operations during what the workers’ union calls the largest strike against the company in U.S. history.
They helped offset a tumble for Micron Technology, which fell 15.3% despite also reporting stronger profit than expected. The computer memory company’s revenue fell short of Wall Street’s forecasts, and CEO Sanjay Mehrotra said it expects demand from consumers to remain weaker in the near term. It gave a forecast for revenue in the current quarter that was well short of what analysts were thinking.
