Stock Market Today: Markets Rebound After Fed-Induced Selloff
Major Indexes Recover as Investors Digest Fed’s Rate Outlook
On Thursday, December 19, 2024, U.S. stock markets are showing signs of recovery following yesterday’s significant selloff triggered by the Federal Reserve’s interest rate projections. As of 10:14 AM EST, the S&P 500 is up 0.37% to 5,894.09, the Dow Jones Industrial Average has gained 0.36% to 42,477.65, and the Nasdaq Composite has risen 0.39% to 19,467.47.
Fed’s Rate Decision and Market Reaction
The market turbulence stems from the Federal Reserve’s decision on December 18 to lower its benchmark overnight borrowing rate to a target range of 4.25% to 4.5%. However, the central bank signaled it was likely to implement only two interest rate cuts in 2025, down from the four reductions previously anticipated. This more hawkish stance led to a sharp market decline, with the Dow Jones Industrial Average experiencing its longest losing streak since 1974.
Key Economic Data Released
Today’s market rebound is supported by several important economic indicators released this morning:
1. Initial Jobless Claims: Reported at 220,000, down from the previous week’s 242,000, indicating a resilient labor market.
2. Core PCE Prices (Final): Increased to 2.2% from the previous 2.1%, suggesting slightly higher inflation pressures.
3. GDP Final (Q3 2024): Revised upward to 3.1% from the earlier estimate of 2.8%, showcasing stronger economic growth.
These data points suggest that the U.S. economy remains robust, potentially justifying the Fed’s cautious approach to future rate cuts.
Notable Stock Movements
Several stocks are making significant moves in today’s trading session:
– Micron Technology (MU): Down 17.71% after issuing weaker-than-expected guidance for Q2 2025.
– Darden Restaurants (DRI): Up 14.24% following strong earnings results.
– Accenture (ACN): Gained 6.84% after beating quarterly expectations.
– Lamb Weston Holdings (LW): Plummeted 20.15% due to a surprise loss and CEO resignation.
– Vertex Pharmaceuticals (VRTX): Fell 11.94% on news related to its drug pipeline.
Upcoming Market Events
Investors are closely watching several key events that could impact market sentiment in the coming days:
1. Nike (NKE) Earnings Report: The sportswear giant is set to release its Q2 2025 results after market close today, marking the first report under new CEO Elliott Hill.
2. FedEx (FDX) Earnings: The shipping company is expected to report earnings growth in its Q2 2025 results, also scheduled for release after today’s closing bell.
3. Holiday Shopping Data: With the crucial holiday shopping season in full swing, retail sales figures and consumer spending trends will be closely monitored.
Market Outlook and Analyst Perspectives
Despite the recent volatility, many analysts remain cautiously optimistic about the market’s prospects. LPL Financial chief equity strategist Jeff Buchbinder noted, “Stretched positioning and sentiment left stocks vulnerable to a selloff. The big jump in inflation expectations and related bond selloff was a convenient excuse.”
However, concerns persist about the impact of higher interest rates on economic growth and corporate earnings. The yield on the 10-year Treasury note has risen above 4.5%, potentially pressuring equity valuations.
Global Market Context
International markets are also reacting to the Fed’s decision, with European stocks sliding as central banks take center stage. The Bank of England held interest rates steady, influencing currency markets and the U.S. dollar’s strength.
As we approach the end of 2024, investors are reassessing their portfolios and strategies for the coming year. The interplay between economic data, corporate earnings, and central bank policies will continue to shape market dynamics in the weeks and months ahead.
