Dow Jones Rises as S&P 500 and Nasdaq Slip—US Stock Market Struggles for Direction

Wall Street Mixed as S&P 500 Struggles to Sustain Rebound

U.S. stocks traded unevenly Thursday as investors assessed the Federal Reserve’s rate outlook and ongoing economic uncertainties. The Dow Jones Industrial Average advanced, while the S&P 500 and Nasdaq wavered, struggling to hold onto gains from the previous session’s rally. Traders remain cautious amid concerns over inflation, trade policies, and the broader economic landscape.

How Are Markets Reacting to the Fed’s Outlook?

The Fed held rates steady as expected but reinforced its projection for two 25-basis-point cuts by year-end. Market participants are now pricing in a 63-basis-point reduction this year, with a 60% probability of a June rate cut, according to CME Group’s FedWatch tool. While Chair Jerome Powell’s remarks provided some relief, inflation concerns continue to cast uncertainty over the central bank’s policy path.

Despite recent gains, both the S&P 500 and Nasdaq remain in technical correction territory, down more than 10% from recent highs. The CBOE Volatility Index (VIX) eased to 19.6, reflecting a slightly more stable market environment but still indicating caution.

Which Sectors and Stocks Are Driving Market Action?

Eight of the 11 S&P 500 sectors advanced, led by communication services, which gained 1.2%. Growth stocks, which bore the brunt of recent selling, saw a rebound, with Meta climbing 4%, Nvidia up 1.9%, and Amazon rising 1.2%.

Darden Restaurants surged 6% after forecasting stronger-than-expected quarterly sales, signaling resilience despite tariff-related uncertainties. Conversely, Accenture tumbled 6.2% after citing delays in government contracts due to reduced federal spending.

What Economic Data Is Shaping Market Sentiment?

The latest labor market data showed jobless claims largely in line with expectations, reinforcing the view of a stable employment environment. However, the Philadelphia Fed’s manufacturing index rebounded more than anticipated, suggesting persistent price pressures. This data adds complexity to the Fed’s decision-making process, as inflation risks could limit the scope of rate cuts.

What’s the Market’s Next Move?

The S&P 500’s struggle to sustain its recovery signals ongoing uncertainty. While traders welcome the Fed’s dovish stance, concerns over inflation, trade policy, and global economic stability continue to weigh on sentiment. Investors will closely monitor upcoming inflation reports and corporate earnings for further clarity on the market’s direction, with volatility likely to persist as economic data unfolds.

More Information in our Economic Calendar.