Wall Street Bounces Back as Stocks Shake Off Fed Sell-Off

Stocks rallied Thursday, one day after the Fed's first rate hike since 2023, as falling Treasury yields, lower oil prices, and tech gains powered a broad rebound.

U.S. equities climbed sharply Thursday as traders clawed back losses from Wednesday's post-Fed sell-off. The Dow Jones Industrial Average added 316.14 points, or 0.61%, to settle at 51,778.04, the S&P 500 rose 1.14% to 7,637.76, and the Nasdaq Composite jumped 1.69% to 26,418.30, according to CNBC. The rally began at the open, with the Dow up roughly 410 points just after the bell, and held through the close. Technology led the way, with Nvidia gaining 2.5% and the sector the best-performing S&P 500 group for the session.

The bounce came against the backdrop of a hawkish Fed. Instead of extending Wednesday's decline, investors treated the hike as clarity: Bob Edwards, chief investment officer at Edwards Asset Management, told Kiplinger that stocks now have "the clarity needed from the Federal Reserve to resume their rally." The Wealth Alliance CEO Robert Conzo described Thursday's action in one word — relief — that the Fed is addressing a sticky inflation problem, CNBC reported.

Two macro moves did the heavy lifting. Oil also retreated, easing inflation pressure: U.S. crude closed down 0.51% at $101.91 and Brent slid 0.95% to $104.82, with CNBC reporting that Saudi Arabia reportedly made more crude cargoes available to Asian refiners via ship-to-ship transfers near Oman's Sohar port. Tech names rallied alongside: Nvidia and Amazon rose more than 2% each, Microsoft gained 1.5%, and Intel advanced 7%.

Generac was the standout, soaring after striking a deal with Amazon to supply backup generators for data centers. CNBC reported initial deliveries totaling $2.4 billion between 2027 and 2028 plus a $340 million stock right, while Kiplinger sized the contract at up to $8 billion through 2033 with warrants on 1.7 million shares at $201 apiece — the two outlets gave different valuations, so both figures stand as reported. Under the surface, though, breadth deteriorated: CNBC reports just over half of S&P 500 names now trade below their 200-day moving average, and BTIG's Jonathan Krinsky warned further downside may follow, noting banks had their worst day since February.

Economic reports added texture to the rebound. The Labor Department reported first-time jobless claims fell to 196,000 for the week ending Sept. 12, down 10,000 and well below the 207,000 consensus, while continuing claims dropped 39,000 to 1.73 million, per CNBC. Housing came in soft, with August building permits at 1.394 million (down 2.7%) and housing starts at 1.275 million (down 2.6%), both slightly below forecasts. Meanwhile copper hit 6.6150, its highest since Sept. 10, with miners like Freeport-McMoRan and Southern Copper up more than 3%, CNBC said.

Analysts caution the relief may be temporary. Conzo told CNBC the market still faces "extreme" volatility depending on the Middle East conflict, warning that elevated oil would embed inflation deeper in consumer prices. Kiplinger's Edwards called the bond market's biggest moves likely behind it and flagged a chance to lock in elevated yields. The Motley Fool's midday coverage noted investors are also watching AI-exposed names — CoreWeave fell almost 4% on a $3 billion convertible bond sale — and suggests investors review sector exposure, particularly to AI, as further volatility from oil supply disruptions has not abated.