The stock market is recovering from its biggest selloff in months early Thursday

NEW YORK, Dec 19 (Reuters) – Wall Street rallied and U.S. Treasury yields continued their rise early on Thursday as stocks recovered from their steep fall in the wake of the Federal Reserve’s hawkish forecast.

The dollar gave back some of its gains from Wednesday and gold rallied as investors adjusted to the reality that the central bank will take a slower, more measured approach to monetary easing next year.

The Fed’s cautious economic forecasts and expected slowdown in interest rate cuts triggered the biggest sell-off in US stocks in months on Wednesday.

“People are trying to understand yesterday’s market reaction to the Fed,” said Thomas Martin, senior portfolio manager at Globalt in Atlanta. “In general, what happened at the Fed was good news; they are at work on inflation, the economy is strong, the final GDP number of 3.1% is not bad.”