U.S. equity indexes surged on Thursday, putting the Dow Jones Industrial Average on track to end a 10-day losing streak. This increase comes as the momentum behind a sharp selloff spurred by a reduction in the Federal Reserve's easing program started to fade. The S&P 500 rose by 0.3% to 5,883.5, while the Nasdaq climbed 0.3% to 19,426.5, and the Dow jumped 0.3% to 42,456.6 after midday trading.
Utilities, technology, and communication services sectors were at the forefront of the gains, although energy stocks faced the sharpest decline during the intraday session. Investors have been 'clawing back some of the losses' as they absorbed the Federal Reserve's 'hawkish tilt and raised inflation forecast for 2025,' a research note from D.A.
Davidson stated. The decline of the Dow on Wednesday established its longest losing streak in over 40 years, following the Fed's reduction of its interest-rate cut forecast from four to just two for the coming year. Meanwhile, the S&P 500 and the Nasdaq recorded significant losses, as pointed out by Desjardins, after the Fed increased its price growth outlook for 2025 by 0.4 percentage points.
The Fed 'has upgraded its neutral rate forecast in every [Summary of Economic Projections] this year, increasing it from 2.5% late last year to 3.0%' on Wednesday. In a separate economic development, a day after the Fed modified its policy easing program, the U.S. Bureau of Economic Analysis reported that the final reading on Q3 gross domestic product growth was adjusted to 3.1% from a previous estimate of 2.8%, surpassing the unchanged 2.8% expected in a Bloomberg survey.
GDP experienced a 3% growth in Q2. Additionally, the Conference Board's measure of leading indicators rose by 0.3% in November, defying the anticipated decline of 0.1% according to a Bloomberg survey, following a 0.4% drop in October. This uptick marked the first increase for the index since February 2022, alleviating recession fears, as noted by the Conference Board.
'Overall, the rise in LEI is a positive sign for future economic activity in the U.S.,' stated Justyna Zabinska-La Monica, Senior Manager of Business Cycle Indicators at the Conference Board. The U.S. Dollar index increased by 0.4% to 108.45, following a brief peak at its 52-week high of 108.33 earlier in the trading session.
Meanwhile, gold prices tumbled by 1.8% to $2,607.1 per ounce, with silver also witnessing a significant drop of 4.5% to $29.35 per ounce. U.S. Treasury yields showed mixed results during the intraday trading, with the 10-year yield rising by 8.8 basis points to 4.59%, and the two-year yield decreasing by 3.2 basis points to 4.32%.
In the corporate arena, Darden Restaurants ($DRI) updated its full-year revenue outlook positively as the restaurant chain reported better-than-expected fiscal Q2 results, with shares soaring 15% intraday, marking it as the top performer on the S&P 500. Conversely, Lamb Weston ($LW) faced disappointing fiscal Q2 results, leading to a reduction in its full-year guidance.
The supplier of frozen potato products also announced that its Chief Executive Officer Tom Werner would step down, resulting in a staggering 22% drop in share price, making it the worst performer on the S&P 500. Additionally, West Texas Intermediate crude oil futures dipped by 0.8% to $70.02 a barrel..