NEW YORK (AP) — U.S. stocks are rising on Wall Street following one of their worst days of the year. The S&P 500 climbed 0.9% in early trading Thursday, a day after tumbling 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 383 points, or 1%. The Nasdaq composite rose 1%. The S&P 500 is still on track for one of its best years of the millennium. Darden Restaurants, which owns Olive Garden and other chains, rose after delivering profit that edged past analysts’ expectations.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Wall Street was heading toward a rebound Thursday following a big selloff one day earlier when the Federal Reserve forecast fewer interest rate cuts in 2025 that it previously projected.
Futures for the S&P 500 gained 0.7% while futures for the Dow Jones Industrial Average were up 0.5%.
Although the Fed on Wednesday announced it was cutting its key rate by a quarter of a percentage point as expected, investors were somewhat caught off guard by the central bank's projections for rate cuts next year. The median expectation among Fed officials is for two more cuts to the federal funds rate in 2025, or half a percentage point’s worth. That’s down from the four cuts — equal to at least a full percentage point — expected just three months ago.
Wall Street loves lower interest rates, but the cut was already widely expected and investors were more focused on how much more the Fed will cut next year. Expectations for a series of cuts in 2025 helped the U.S. stock market set an all-time high 57 times so far in 2024.
On Wednesday, the S&P 500 fell 3%, just shy of its biggest loss for the year. The Dow lost 1,123 points, or 2.6%, and the Nasdaq composite dropped 3.6%. The Russell 2000 index of small-cap stocks tumbled 4.4%.
Powell said some Fed officials, but not all, are also already trying to incorporate uncertainties inherent in a new administration coming into the White House. Worries are rising on Wall Street that President-elect Donald Trump’s preference for tariffs and other policies could further fuel inflation.
“When the path is uncertain, you go a little slower,” Powell said.
Wednesday’s cut — which brought the Fed's benchmark rate down to between 4.25% and 4.5% — was its third this year.
In U.S. premarket trading Thursday, Micron tumbled 12.1% after the Idaho-based chipmaker beat Wall Street profit targets but gave a tepid forecast for early next year. Another Idaho company, Lamb Weston, tumbled nearly 20% before the bell. The maker of french fries and other frozen potato products badly missed analysts' profit targets and fell short on sales too.
Darden Restaurants, the owner of Olive Garden and other casual dining chains, climbed 9.3% after it gave a strong 2025 sales forecast.
Amazon shares were up 1.4% early, even as workers at seven of its facilities were set to strike early 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.
In Europe, the Bank of England kept its main interest rate unchanged at 4.75% Thursday, with new data showing inflation rising to 2.6%. The rate pause comes as inflation there moved further above the central bank's 2% target rate, while the British economy is flatlining at best.
In midday European trading, Britain’s FTSE 100 lost 1.2%, as did the CAC 40 in Paris. Germany’s DAX was 0.9% lower.
The Bank of Japan opted to keep its benchmark rate at 0.25%. That decision, which also was no surprise, pushed the dollar higher against the Japanese yen.
The dollar was trading at 156.88 yen, up rom 154.79 yen late Wednesday.
In Asia, Tokyo’s Nikkei 225 lost 0.7% to 38,813.58.
Chinese markets also declined. The Hang Seng index fell 0.6% to 19,752.51, while the Shanghai Composite index dropped 0.4% to 3,370.03.
Australia's S&P/ASX 200 shed 1.7% to 8,168.20, while the Kospi in South Korea slipped 2% to 2,435.93. India's Sensex fell 1.2%.
In Taiwan, the Taiex lost 1%, while Bangkok's SET fell 1.5%.
In other dealings early Thursday, U.S. benchmark crude oil gave up 23 cents to $69.79 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, fell 26 cents to $73.13 per barrel.
The euro rose to $1.0405 from $1.0355.
Elaine Kurtenbach And Matt Ott, The Associated Press