U.S. stocks bounced back on Thursday as investors returned to risk assets following a sharp sell-off triggered by the Federal Reserve's latest policy meeting. The rebound came as traders weighed the implications of a more hawkish interest-rate outlook while focusing on strength in technology and semiconductor shares.
Shortly after the opening bell, the S&P 500 advanced 1.2%, while the Nasdaq Composite gained 1.6%. The Dow Jones Industrial Average rose 438 points, or roughly 0.9%, recovering part of the previous session's losses, before a slight retracement.
Technology stocks led the rally, with semiconductor companies posting some of the market's strongest gains.
Intel leads semiconductor rally
Intel emerged as one of the session's top performers, climbing 7% after President Donald Trump announced that the company would partner with Apple to design chips in the United States.
The development boosted sentiment across the semiconductor sector, lifting several major chipmakers alongside Intel. Nvidia gained more than 1%, while Micron Technology advanced around 6%.
The broader semiconductor industry also participated in the rally. The iShares Semiconductor ETF (SOXX), a widely watched gauge of chip stocks, jumped more than 5% as investors welcomed signs of strengthening domestic semiconductor investment.
The gains helped offset concerns that emerged after the Federal Reserve's latest policy decision and renewed optimism toward growth-oriented sectors.
Fed outlook remains a key concern
Wall Street experienced significant pressure on Wednesday following the Federal Reserve's first meeting under Chairman Kevin Warsh.
While policymakers left interest rates unchanged, investors focused on the updated "dot plot," which showed a notable shift toward tighter monetary policy. Nine of the 18 Federal Reserve officials now expect interest rates to move higher in 2026.
The projections marked a meaningful change in expectations and raised concerns that inflation remains a larger challenge than many investors had anticipated.
Warsh also drew attention after choosing not to submit his own rate forecast. During the post-meeting press conference, he repeatedly emphasized the importance of restoring price stability, a message many market participants interpreted as hawkish.
Market watches new Fed leadership
Warsh's first meeting as Fed chairman signaled several changes from the central bank's approach under former Chairman Jerome Powell.
The meeting introduced a shorter policy statement and unveiled five new task forces that could influence future Federal Reserve operations. Investors also noted a significant shift in interest-rate projections, with policymakers becoming more open to future rate increases.
According to Sonu Varghese, chief macro strategist at Carson Group, the central bank's message complicated the market outlook.
He noted that the Fed kept rates steady but delivered a more hawkish set of projections, reflecting ongoing inflation concerns. At the same time, divisions remain within the committee, as only about half of policymakers still project rate increases later this year.
For investors, Thursday's rebound suggests that optimism surrounding corporate developments and technology stocks remains strong. However, the market's direction will likely continue to depend on incoming inflation data and how Chairman Warsh guides monetary policy in the months ahead.
