Wall St rebounds from steep sell-off with boost from chips
By Stephen Culp
NEW YORK (Reuters) -U.S. stocks rose on Thursday, paring the previous day's losses, as economic data fueled optimism that the Federal Reserve would ease monetary policy and revived investor risk appetite.
All three major U.S. stock indexes were higher, with surging chip stocks led by Micron Technology (NASDAQ:MU) after its better-than-expected quarterly forecast, putting the tech-heavy Nasdaq (IXIC) out front.
Data on Thursday showed third-quarter U.S. economic growth was not as robust as originally stated, and cracks are appearing in the tight labor market, which the Fed considers an obstacle to cooling inflation.
U.S. stocks abruptly sank late Wednesday afternoon, snapping a multi-session rally, possibly accelerated by hedging activity associated with short-dated option trades.
«After a breather yesterday, the economic data further underscored investor confidence that the Fed is now on a rate cut track,» said Greg Bassuk, chief executive officer at AXS Investments in New York. «The investor narrative yesterday was about profit taking on the heels of a very long consistent holiday rally.»
«Investors would be prudent to buy on these dips,» Bassuk said, adding that he believes stocks «will end the year strongly.»
Financial markets are pricing in a 71.3% likelihood that the U.S. central bank with reduce the Fed funds target rate by 25 basis points as soon as March, according to CME's FedWatch tool.
The market is awaiting the Commerce Department's personal consumption expenditures (PCE) report due on Friday, which will cover income growth, consumer spending and inflation.
At 2:25 p.m., the Dow Jones Industrial Average rose 152.83 points, or 0.41%, to 37,234.83, the S&P 500 gained 24.66 points, or 0.52%, at
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