Dow, S&P 500 and Nasdaq are recovering from the Fed-induced decline

U.S. stocks rebounded on Thursday from the previous day’s selloff, which was fueled by a more hawkish forecast from the Federal Reserve on its interest rate path.

The Dow Jones Industrial Average (^DJI) rose more than 1% after 10 straight losing sessions. Meanwhile, the S&P 500 (^GSPC) rose about 1%, and the tech-heavy Nasdaq Composite (^IXIC) rose more than 1%.

Markets are recovering after a sharp reaction the day before, sparked by the Fed reducing the number of expected rate cuts next year to two, and Chairman Jerome Powell saying even Wednesday’s decision – the quarter-point rate cut – was “Closer” call.”

Markets interpreted the Fed’s moves as a “hawkish cut” and reacted accordingly, causing the S&P 500 and Nasdaq to suffer their worst days since the summer.

Meanwhile, the blue-chip Dow index is in the midst of its longest losing streak in 50 years and is looking to break out of this crisis on Thursday. The Dow is still up over 12% this year.

On the economic front, the third estimate of US GDP for the third quarter showed the economy grew at an annual rate of 3.1%, higher than the previous figure of 2.8%. Other data released Thursday morning showed that 220,000 weekly jobless claims were filed in the week ending Dec. 14, down from 242,000 the week before.

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