The US stock market rose slightly in early Thursday trading. The market continues to evaluate the outlook for the Federal Reserve’s monetary policy. Yesterday, the Federal Reserve kept interest rates unchanged and predicted two rate cuts this year. The number of initial jobless claims in the United States slightly increased last week, but the overall number of layoffs remains low.
The Dow Jones Industrial Average rose 86.25 points, or 0.21%, to 42050.88 points; The Nasdaq rose 44.70 points, or 0.25%, to 17795.49 points; The S&P 500 index rose 11.89 points, or 0.21%, to 5687.18 points.
On Wednesday, the US stock market closed higher, led by technology stocks. The S&P 500 index is currently down more than 7% from its historical high and is also expected to end its four week continuous decline. The index briefly entered the correction zone last week.
On that day, the Federal Reserve announced that it would maintain interest rates unchanged, lower its economic growth forecast, and raise its inflation expectations. Nevertheless, the central bank still predicts two interest rate cuts this year.
The latest economic forecast shows that Federal Reserve officials have lowered their forecast for economic growth this year and raised their estimate for inflation. According to the median estimate of the “dot plot”, this also shows that officials continue to expect a half percentage point interest rate cut this year, which means two cuts of 25 basis points.
Federal Reserve Chairman Powell first mentioned tariffs at a subsequent press conference, repeatedly emphasizing increased uncertainty and acknowledging the impact of Trump’s policies on the economy. He described the potential impact of tariffs on inflation as potentially temporary or transitional.
The Federal Reserve statement also stated that any inflation increase caused by tariffs could be short-lived, and there is still room for interest rate cuts later this year. The Fed’s remarks once boosted market risk sentiment.
Elyse Ausenbaugh, head of wealth management investment strategy at JPMorgan Chase (240.36, 1.25, 0.52%), said, “The word ‘transitional’ is back, or at least implied. For me, market reactions indicate that investors are willing to believe that tariffs and other policies will not cause long-lasting inflationary pressures and that the Federal Reserve can continue to control the situation
Ryan Wang, an analyst at HSBC in the United States, said, “The potential downside risks to economic growth and the upside risks to inflation, partly due to uncertainty in tariffs and trade policies, have brought complexity to the outlook for monetary policy
Swisquote Bank senior analyst Ipek Ozkardeskaya said, “The Federal Reserve cleverly downplayed the long-term impact of rising inflation while lowering its growth forecast. This decision is more dovish than expected.