TLDR
- U.S. stocks rebounded Thursday after the Fed’s first rate hike in three years
- The Dow rose 316 points, S&P 500 gained 1.14%, Nasdaq jumped 1.69%
- Tech stocks led gains, with Nvidia and Amazon each rising more than 2%
- Treasury yields dropped below 5% and oil prices fell, boosting market sentiment
- Futures pointed higher Friday after the Bank of Japan hiked rates but struck a dovish tone
U.S. stocks bounced back Thursday after a sell-off triggered by the Federal Reserve’s first interest rate hike in three years. Falling oil prices and lower Treasury yields helped push all three major indexes into the green.
The Dow Jones Industrial Average gained 316 points, or 0.61%, to close at 51,778. The S&P 500 rose 1.14% to 7,637, and the Nasdaq Composite climbed 1.69% to 26,418.
Tech Stocks Lead the Recovery
Technology shares drove the recovery. Nvidia and Amazon each rose more than 2%, while Microsoft gained 1.5%. AI-linked chipmakers also had a strong day, with Qualcomm up 2% and Intel jumping 7%.
The gains came after those same stocks had fallen sharply earlier in the week. Several major AI executives had called for a slowdown in AI development, which had rattled the sector.
Fed Chair Kevin Warsh said on Wednesday that inflation remains too high. The Fed raised the overnight federal funds rate by a quarter percentage point. Policymakers also signaled that another hike could come before the end of the year.
Despite the hawkish tone, markets found relief in the clarity the Fed provided. Robert Conzo, CEO at The Wealth Alliance, said the market reaction could be summed up in one word: relief.
“I think there is a relief that the Fed is addressing a sticky inflation problem,” Conzo said.
Oil Prices and Treasury Yields Pull Back
The 10-year Treasury yield dropped more than 7 basis points to 4.93%, falling back below the key 5% level it had crossed on Wednesday after the Fed decision.
Oil also retreated. U.S. crude fell 0.51% to close at $101.91 per barrel. Brent dropped 0.95% to $104.82. The declines came after reports that Saudi Arabia was sending more crude to Asian buyers through ship-to-ship transfers near Oman’s Sohar port.
Saudi Arabia is also expected to restart its east-west pipeline, which was shut after Houthi strikes last week. However, fighting between Saudi Arabia and the Iran-backed Houthis continued, and the Strait of Hormuz remained closed, keeping oil prices from falling further.
Conzo warned that if oil prices stay elevated, inflation could become harder to control. Higher energy costs tend to push up prices across the economy, from retailers to consumers.
Overnight, stock futures extended gains. S&P 500 futures rose 0.34%, Nasdaq 100 futures climbed 0.54%, and Dow futures added 0.29%.
The Bank of Japan raised interest rates as expected but sent a dovish signal to markets, which helped boost equities across Asia and supported the positive mood heading into Friday’s session.
For the week overall, all three major U.S. indexes remained in a flat to slightly negative range.
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