US close: Markets stabilise after dramatic sell-off

US stocks gave up earlier gains to finish flat on Thursday, pausing after a huge sell-off the previous session, as investors continued to digest hawkish comments from the Federal Reserve and a barrage of economic data.

The S&P 500 and Nasdaq both ended the day down 0.1%, following drops of 3.0% and 3.6% on Wednesday, respectively.

The Dow closed just 0.04% higher but managed to close in positive territory for the first time in 11 sessions – its longest losing streak in nearly 50 years – having fallen 6% since 4 December. The Dow shed more than 1,100 points (-2.6%) the previous session after the Fed scaled back its projections for interest-rate cuts in 2025.

“The shockwaves from last night’s ‘hawkish cut’ by the Federal Reserve continue to reverberate. Investors had hoped for an eventful meeting, but the FOMC’s shift to a more cautious outlook caught the market napping, and the resulting sell-off was as quick as it was ugly," said Chris Beauchamp, chief market analyst at IG.

While the central bank cut its benchmark overnight lending rate by 25 basis points to a target range of 4.25%-4.50%, Powell indicated that the Federal Reserve was now only likely to cut interest rates twice in 2025 – for a total of just 50 basis points – compared with current market expectations for four more cuts.

“The sell-off created opportunities to buy the dip, but the atmosphere was still subdued as if traders were waking up to the potential that a Donald Trump Presidency is likely to create downsides as well as up," said AJ Bell head of financial analysis, Danni Hewson. “Risk appetite has been pared back. Trump 2.0 is a known unknown and no one wants to be overexposed if the climate proves inhospitable."

Economic data

On the macro front, the Labor Department reported that initial jobless claims fell by 22,000 to 220,000 last week, beating expectations for a smaller drop to 230,000. Outstanding claims, on the other hand, eased by a smaller reading of 5,000 to 1.87m, while the four-week-moving average, which aims to strip out week-to-week volatility, edged higher by 225,500.

US gross domestic product grew 3.1% in the third quarter, according to the Commerce Department, above consensus estimates for a 2.9% increase, while the personal consumption expenditures index rose 3.7% during the three months ended 30 September to $29.4trn.

Aativity in the US mid-Atlantic region weakened at the end of 2024, according to the Federal Reserve Bank of Philadelphia's manufacturing sector index, which slipped from a reading of -5.5 in November to -16.4 for December. Economists had forecast a reading of 3.0.

Finally, US existing home sales data rose by 4.8% in November to a seasonally adjusted rate of 4.15m, according to the National Association of Realtors, the highest reading in eight months.

Market movers

Shares in chipmaker Micron Technology were down 16% after the company posted weaker-than-expected guidance for the second quarter.

Soho House & Co soared 47% after the private members club revealed that it had received a takeover offer valuing the company at around $1.8bn, an 83% premium to Wednesday's closing price.

Olive Garden owner Darden Restaurants was up nearly 15% after upping its full-year revenue forecast following a better-than-estimated performance in the second quarter.

Dow Jones - Risers

Boeing Co. (BA) $177.04 2.56%
American Express Co. (AXP) $293.08 1.84%
Visa Inc. (V) $315.06 1.70%
International Business Machines Corporation (CDI) (IBM) $223.92 1.70%
3M Co. (MMM) $127.19 1.32%
Merck & Co. Inc. (MRK) $99.53 1.21%
JP Morgan Chase & Co. (JPM) $232.96 1.12%
Amgen Inc. (AMGN) $261.19 0.93%
Travelers Company Inc. (TRV) $237.84 0.77%
Apple Inc. (AAPL) $249.79 0.70%

Dow Jones - Fallers

Walgreens Boots Alliance, Inc. (WBA) $9.35 -3.61%
Dow Chemical Co. (DOW) $39.10 -2.62%
Unitedhealth Group Inc. (UNH) $488.33 -2.28%
Home Depot Inc. (HD) $385.02 -2.23%
Chevron Corp. (CVX) $141.15 -2.03%
Intel Corp. (INTC) $19.07 -1.20%
Caterpillar Inc. (CAT) $360.24 -1.00%
Johnson & Johnson (JNJ) $143.58 -0.81%
Verizon Communications Inc. (VZ) $39.96 -0.70%
Coca-Cola Co. (KO) $62.45 -0.64%

S&P 500 - Risers

Darden Restaurants Inc. (DRI) $183.44 14.74%
TripAdvisor Inc. (TRIP) $13.89 7.26%
Accenture Plc (ACN) $372.05 7.03%
Nordstrom Inc. (JWN) $24.06 5.11%
CenturyLink Inc. (LUMN) $6.06 4.66%
United Airlines Holdings Inc (UAL) $95.52 4.43%
Alaska Air Group Inc. (ALK) $64.97 4.05%
Carmax Inc. (KMX) $84.23 3.45%
Dxc Technology Company (DXC) $21.49 3.17%
General Electric Co. (GE) $164.80 3.03%

S&P 500 - Fallers

Lamb Weston Holdings, Inc. (LW) $62.50 -20.10%
Micron Technology Inc. (MU) $87.09 -16.18%
Vertex Pharmaceuticals Inc. (VRTX) $396.64 -11.37%
Cintas Corp. (CTAS) $182.79 -10.57%
Western Digital Corp. (WDC) $59.63 -6.15%
Lam Research Corp. (LRCX) $71.21 -5.31%
Lennar Corp. Class A (LEN) $138.40 -5.16%
Seagate Technology Plc (STX) $87.54 -4.43%
Walgreens Boots Alliance, Inc. (WBA) $9.35 -3.61%
Extra Space Storage (EXR) $142.35 -3.60%

Nasdaq 100 - Risers

Check Point Software Technologies Ltd. (CHKP) $187.01 3.27%
Ulta Salon, Cosmetics & Fragrance Inc. (ULTA) $425.52 2.14%
Liberty Global plc Series A (LBTYA) $12.51 2.04%
Qurate Retail Inc. (QRTEA) $0.34 1.96%
Expedia Group Inc. (EXPE) $179.41 1.80%
Cognizant Technology Solutions Corp. (CTSH) $79.49 1.57%
Paypal Holdings Inc (PYPL) $86.78 1.56%
Trip.com Group Limited (TCOM) $72.57 1.48%
Paychex Inc. (PAYX) $137.81 1.44%
Netflix Inc. (NFLX) $902.04 1.40%

Nasdaq 100 - Fallers

Micron Technology Inc. (MU) $87.09 -16.18%
Vertex Pharmaceuticals Inc. (VRTX) $396.64 -11.37%
Cintas Corp. (CTAS) $182.79 -10.57%
Western Digital Corp. (WDC) $59.63 -6.15%
Lam Research Corp. (LRCX) $71.21 -5.31%
Seagate Technology Plc (STX) $87.54 -4.43%
Sirius XM Holdings Inc (SIRI) $20.60 -4.23%
Walgreens Boots Alliance, Inc. (WBA) $9.35 -3.61%
Baidu Inc. (BIDU) $85.58 -3.14%
Mercadolibre Inc. (MELI) $1,666.00 -2.94%