Traders work on the New York Stock Exchange
The New York Stock Exchange opened higher on Thursday, investors having now digested the announcement from the American Federal Reserve (Fed) of a possible slowdown in the rate of reduction of its key rates in 2025.
In early trading, the Dow Jones index gained 284.67 points, or 0.67%, to 42,611.54 points. The broader Standard & Poor’s 500 rose 45.28 points, or 0.77%, to 5,917.44 points.
The Nasdaq Composite took 189.03 points, or 0.97%, to 19,581.72 points.
The Fed announced Wednesday that it expects only two rate cuts of 25 basis points in 2025, half a percentage point less than in its September forecast. The effect was immediate on the stock markets where the three main Wall Street indices suffered their worst fall in one session since August on Wednesday.
After the initial panic, the indices rebounded on Thursday, the market now taking into account the other implications of the Fed’s announcements.
“Projecting only two rate cuts next year indicates that the Fed recognizes the current ‘remarkable’ strength of economic conditions in the United States,” said JoAnne Bianco, investment strategist at Bondbloxx.
In fact, the Fed’s projections show the U.S. economy is expected to grow 2.5% this year and 2.1% in 2025, improvements from September’s forecast.
The final data on the gross domestic product (GDP) of the United States for the third quarter, published Thursday by the Commerce Department, also show stronger growth than expected at an annualized rate, at 3.1%, against 2.8 % in the November estimate.
A sign of a return to calm on the markets, the CBOE volatility index fell by more than 26%, to around 20 points, after climbing on Wednesday to a four-month high, above 28 points.
In terms of values, mega-capitalizations like Tesla and Nvidia rebounded from 1.5% to 3%, while Micron Technology fell by 14.74% after announcing that it anticipated quarterly turnover and profit lower than Wall Street’s expectations.
Accenture advances 5.43%, the IT services provider having exceeded Wall Street forecasts with its first quarter revenues.
Homebuilder Lennar lost 2.80% after reporting lower-than-expected fourth-quarter results.
(Written by Claude Chendjou, edited by Sophie Louet)
