The Dow Jones Industrial Average managed to eke out a gain on Thursday, snapping a 10-day losing streak, its longest since 1974. However, broader markets remained mixed as investors continued to digest the Federal Reserve’s surprisingly hawkish rate decision from the previous day. The Dow rose a modest 0.04% to close at 42,342.24, while the S&P 500 slipped 0.09% to 5,867.08, and the tech-heavy Nasdaq Composite fell 0.10% to 19,372.77.
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Dow Jones Industrial Average chart
Adam Turnquist, chief technical strategist at LPL Financial, noted that the Federal Open Market Committee (FOMC) meeting “brought back some unwanted clouds of uncertainty over monetary policy next year.” Market expectations have adjusted to anticipate a less aggressive and slower pace of rate cuts than previously hoped. Turnquist added that factors beyond the Fed’s decision, such as overbought conditions and deteriorating market breadth, also contributed to the selling pressure. He cautioned that the near-term risk remains tilted towards higher Treasury yields and a stronger dollar, potentially creating headwinds for stocks.
Micron Technology Shares Plummet After Muted Outlook
Micron Technology experienced a significant sell-off, with shares plunging 15.8% to a four-year low of $87.48. The memory chip maker, crucial for producing high-bandwidth memory (HBM) components used in AI applications, presented a subdued near-term revenue forecast despite reporting solid first-quarter earnings. While Micron projected the HBM market to reach $100 billion by 2030, with the company aiming to capture 20% of that market, investors reacted negatively to the short-term outlook.
Existing Home Sales Rebound, but Context Matters
November saw existing home sales climb to an eight-month high, rising 4.8% from October to a seasonally adjusted annual rate of 4.15 million units. However, this increase should be viewed in the context of September’s figure, which marked a fourteen-year low, and the persistent lack of new inventory coupled with rising mortgage rates. Despite the sales rebound, house prices reached a new record high of $406,100, a 4.7% year-over-year increase.
Initial Market Rebound Fades
Early trading indicated a potential market rebound, with the S&P 500 initially up 0.91% and the Nasdaq rising 1.08%. The Dow recovered some ground from the previous day’s significant losses. However, this early optimism ultimately waned.
Jobless Claims Fall to Two-Month Low, GDP Revised Upward
Positive economic data emerged as initial jobless claims decreased by 22,000 to 220,000, the lowest level since early November. The Commerce Department also revised its third-quarter GDP growth estimate upward to 3.1% from 2.8%, primarily due to stronger consumer spending. This data initially fueled premarket gains, but the momentum failed to hold.
Bank of England Maintains Key Lending Rate
The Bank of England opted to hold its key lending rate steady at 4.75% in its final policy meeting of the year. This decision reflects the complex economic landscape in the U.K., characterized by both growth and inflation challenges. Governor Andrew Bailey emphasized the prevailing economic uncertainty, stating that the bank could not commit to the timing or extent of future rate cuts.
Conclusion: Market Navigates Uncertainty After Fed Decision
While the Dow managed to halt its losing streak, the overall market sentiment remained cautious following the Federal Reserve’s latest policy update. The central bank’s less dovish outlook on future rate cuts injected uncertainty into the market, contributing to volatility. Economic data, although positive, failed to sustain an initial market rebound. Investors are likely to remain focused on economic indicators and central bank commentary as they navigate the evolving market landscape. The interplay between inflation concerns, economic resilience, and monetary policy decisions will continue to shape market direction in the coming weeks.
