Specialist Meric Greenbaum is pictured working on the floor of the New York Stock Exchange on Wednesday, December 18, 2024. The photo captures the moment the Federal Reserve announced its latest decision on interest rates. (AP Photo/Richard Drew)
Wall Street endured a turbulent Thursday, as an early rally fizzled, leaving major indexes largely unchanged by the close. The S&P 500 dipped 0.1%, following one of its steepest declines this year, after the Federal Reserve suggested fewer interest rate cuts in 2025 than anticipated. The Dow Jones Industrial Average edged up less than 0.1%, while the Nasdaq Composite also slipped by 0.1%.
The day began with cautious optimism, as investors tried to recover from Wednesday's dramatic sell-off. On that day, the Dow plunged over 1,100 points, and the S&P 500 lost 2.9%, rattling markets already on edge about high valuations. The recent fluctuations highlight Wall Street's vulnerability to shifts in Federal Reserve policies, as traders reassess their expectations for future rate cuts.
Market enthusiasm dimmed as data revealed a mixed economic picture. A report indicated the U.S. economy grew at an impressive 3.1% annualized rate during the summer, but manufacturing showed signs of renewed contraction. Meanwhile, fewer workers filed for unemployment benefits, underscoring a resilient job market.
The bond market also reflected investor uncertainty. The 10-year Treasury yield rose slightly to 4.57%, but the two-year yield, which is more sensitive to Federal Reserve actions, dipped to 4.31%. These changes continue to weigh on mortgage rates, complicating the housing market. Lennar, a major homebuilder, saw its stock drop 4.8% after reporting disappointing quarterly results. CEO Stuart Miller cited rising mortgage rates as a key factor limiting affordability, despite strong demand and ongoing supply shortages.
Not all sectors suffered equally. Olive Garden’s parent company, Darden Restaurants, surged 15.1% after posting earnings that exceeded expectations. Similarly, Accenture climbed 6.7% following a robust earnings report and an upbeat revenue forecast. Amazon also gained 1.8%, despite worker strikes at seven of its facilities during peak holiday operations.
However, some companies faced steep losses. Micron Technology fell 16.7% after missing revenue expectations and issuing a weaker-than-anticipated forecast. Lamb Weston, a maker of frozen potato products, plummeted 22.6% as softening demand outside North America and reduced financial targets alarmed investors.
Globally, markets mirrored Wall Street’s unease. London’s FTSE 100 dropped 1.1% after the Bank of England decided to keep its interest rate steady amid soaring inflation. In Asia, Japan’s Nikkei 225 fell 0.7% after the Bank of Japan maintained its ultra-low interest rate policy.
The day’s mixed results left traders grappling with what lies ahead. With interest rate uncertainty looming, Wall Street faces a delicate balancing act as it enters the final stretch of the year.
