US equity indexes demonstrated notable recovery after midday Thursday, with the Dow Jones Industrial Average poised to end its streak of 10 consecutive losses. This rebound comes as a sharp selloff triggered by a retreat in the Federal Reserve's easing program seems to be losing momentum. Both the S&P 500 and the Nasdaq experienced a rise of 0.2%, reaching 5,883.5 and 19,426.5 respectively, while the Dow saw an increase of 0.3% to settle at 42,433.1.
Sectors such as technology, communication services, and utilities emerged as frontrunners in the gains during intraday trading, contrasting sharply with the energy sector, which faced the steepest declines. Investors began to recover some of their losses as they interpreted the Federal Reserve's hawkish stance and adjusted inflation predictions for 2025.
A research note from D.A. Davidson indicated this shift in investor sentiment. The Dow had closed lower on Wednesday, marking its 10th consecutive day of declines—its longest losing streak in over four decades. This decline followed the Fed's revision of its expectations for interest-rate cuts next year, reducing the forecast from four to two cuts.
The S&P 500 and Nasdaq mirrored the downtrodden sentiment, closing sharply lower as Desjardins reported that the Fed increased its price growth outlook by 0.4 percentage points for 2025. According to Desjardins, the Fed has consistently elevated its neutral rate forecast throughout the year, adjusting it from 2.5% late in the previous year to 3.0% on Wednesday. In economic updates on Thursday, the US gross domestic product (GDP) was revised upwards, reflecting a 3.1% increase in Q3 compared to a prior estimate of 2.8%.
This adjustment surpassed expectations, which had suggested a steady 2.8% increase as indicated in a survey compiled by Bloomberg. The GDP also saw a 3% increase in Q2. Additionally, the Conference Board's index of leading economic indicators rose by 0.3% in November, which diverged dramatically from predictions of a 0.1% decline based on Bloomberg’s survey, following a 0.4% decrease in October. US Treasury yields displayed mixed results during intraday trading, with the 10-year yield increasing by eight basis points to 4.58%.
In contrast, the two-year yield dropped six basis points to reach 4.3%. In corporate highlights, Darden Restaurants ($DRI) raised its full-year revenue outlook following an impressive fiscal Q2 performance that exceeded analysts' expectations. Consequently, Darden's shares rose 15% intraday, claiming the spot as the top performer on the S&P 500. Meanwhile, West Texas Intermediate crude oil futures saw a slight decline of 0.4%, settling at $70.32 a barrel..