Wall Street Today: US stocks recoup early losses after US Fed’s dovish outlook, Dow up 40,000 points; Meta gains 4%

Wall Street Today: US stock indexes recouped some of the early losses on Thursday, March 20, after investors digested the US Federal Reserve's outlook on interest rates amid persistent US tariff worries. Traders looked to build on the previous session's gains after a massive sell-off in recent weeks due to the uncertainty tied to US President Donald Trump's unstable trade policies.

The US Fed maintained current interest rates on Wednesday as expected and reaffirmed its forecast for two 25 basis point reductions by the end of year. The central bank also projected slightly reduced growth and increased inflation for the year, alongside a modest uptick in the unemployment rate by 2025.

All the three major stock indexes closed higher by more than one per cent each in the previous session. The CBOE volatility index , also known as Wall Street's fear gauge, fell 0.3 points and was last at 19.6, at a nearly one-month low.

Also Read: US Fed holds interest rates steady at 4.25-4.50%, signals two reductions in 2025: 5 key highlights

Market participants are factoring in 63 basis point cut this year, placing odds of 25 bps rate cut in June at 60 per cent, according to CME Group's Fedwatch tool. Analysts said recent economic data that indicated a cooling economy also led to the US Fed's dovish stance. Despite short-term gains, the S&P 500 and Nasdaq have confirmed a 10 per cent drop from their record highs, known as a technical correction.

Wall Street Today: US stocks gain after dovish Fed outlook

Global markets have seen significant volatility in recent weeks, as investors worry that Trump's aggressive trade policies could spur inflation, potentially leading to a recession and disrupting the Fed's monetary easing cycle.

At 11:20 a.m. ET the Dow Jones Industrial Average rose 179.29 points, or 0.42 per cent, to 42,142.92, the S&P 500 gained 19.70 points, or 0.34 per cent, to 5,694.99 and the Nasdaq Composite gained 86.54 points, or 0.50 per cent, to 17,839.47. Eight of the 11 S&P 500 sectors advanced with communication services leading with a 1.2 per cent rise.

Also Read: US Fed Policy: Will Donald Trump’s tariff chaos pinch Jerome Powell? Interest rate to ‘dot plot’—5 indicators to watch

Growth stocks, which bore the brunt of the recent market rout, gained. Meta share price gained four per cent, Nvidia share price rose 1.9 per cent and Amazon.com shares climbed 1.2 per cent. On the data front, US initial jobless claims were largely aligned with estimates in the week prior.

Darden Restaurants was the latest US company to issue cautious forecasts as a fallout of tariff uncertainty. Its shares rose six per cent after the Olive Garden owner forecast quarterly sales above estimates. Accenture fell 6.2 per cent after the consultancy firm said the Trump administration's efforts to reduce federal spending have led to delays and cancellations of new contracts.

However, US stock indexes opened lower and dropped earlier in the session, as worries about the repercussions of an ongoing global trade war resurfaced. At 09:43 a.m. ET the Dow Jones Industrial Average fell 142.20 points, or 0.35 per cent, to 41,816.93, the S&P 500 lost 16.45 points, or 0.29 per cent, to 5,658.84 and the Nasdaq Composite lost 43.42 points, or 0.24 per cent, to 17,707.37.

Also Read: ‘US Fed ‘well positioned’ for risks amid Trump tariffs’: Jerome Powell reiterates ‘go-slow’ approach on rate cuts

US bond yields, commodity prices

US Treasury yields weakened after US Fed Chair Jerome Powell indicated that the central bank is poised to act in the case of an economic slowdown. The yield on benchmark US 10-year notes fell 4.8 basis points to 4.208 per cent, from 4.256 per cent on Wednesday. The 30-year bond yield fell 4.9 basis points to 4.5175 per cent from 4.567 per cent late on Wednesday.

The two-year note yield, which typically moves in step with rate expectations for the US Federal Reserve, fell 2.8 basis points to 3.951 per cent, from 3.979 per cent late on Wednesday. Oil prices reversed initial losses following upbeat US economic data and amid renewed tensions in the Middle East.

US crude rose 1.55 per cent to $68.20 a barrel and Brent rose to $71.84 per barrel, up 1.5 per cent on the day. Gold prices paused after the safe-haven metal touched all-time highs earlier in the session. Spot gold fell 0.28 per cent to $3,038.62 an ounce. US gold futures rose 0.08 per cent to $3,038.20 an ounce.

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