Stock market today: Dow, S&P 500, Nasdaq fall after Fed-fueled rally stalls
March 21, 2025
US stocks slipped on Thursday, failing to build on a Wednesday rally fueled by reassuring signals from Federal Reserve Chair Jerome Powell after the central bank held interest rates steady.
The Nasdaq Composite (^IXIC) fell about 0.3%, while the S&P 500 (^GSPC) declined by 0.2% and the Dow Jones Industrial Average (^DJI) ended the session just below the flat line. All three major averages saw gains earlier in the trading day before ultimately losing steam.
^DJI ^GSPC ^IXIC
The Fed’s decision to keep interest rates unchanged on Wednesday was expected on Wall Street, but markets rallied, driven by a sense of relief that prior forecasts for two rate cuts this year held up. Doubts had been rising about the path to rate cuts amid concerns the US economy might buckle under President Trump’s broad plans for tariffs.
Read more: The latest on Trump’s tariffs
In a press conference following the decision, Powell contributed to the good mood. The Fed chair reassured investors that inflation impacts from tariffs will likely be “transitory” and recession risks remain low.
But Powell’s comments came after the Fed, in updated projections, revised upward its forecast for inflation at the end of this year while sharply lowering its forecast for economic growth. Those broader economic sentiments have been weighing on markets for much of the past two months, with both the benchmark S&P 500 and tech-heavy Nasdaq sliding into correction territory.
For his part, Trump — who has largely refrained from weighing in on Fed policy thus far in a U-turn from his first term — looked set to amp up pressure on the central bank.
“The Fed would be MUCH better off CUTTING RATES as U.S. Tariffs start to transition (ease!) their way into the economy,” he posted on social media late Wednesday.
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The recently dubbed “Lag Seven” players are once again… lagging.
After a brief comeback on Wednesday, fueled by the Federal Reserve, most of the major tech giants lost steam by late Thursday trading. The exceptions: Nvidia (NVDA) and Meta (META), which each rose a modest 0.8% and 0.7%, respectively, with less than twenty minutes left until the closing bell.
Still, nearly all of the “Magnificent Seven” stocks are off by about 20% from their 52-week highs as risk-off sentiment pervades markets on the heels of greater policy and Fed uncertainties. Tesla (TSLA) is off more than 50%.
“With this uncertainty perhaps persisting, I don’t think this is the time to look for home runs and make big risk bets, particularly before April 2nd,” Michael Kantrowitz, chief investment strategist at Piper Sandler, told Yahoo Finance on Thursday.
“I do think maybe if there are really higher quality names that offer some stability, that’s the type of stuff that we’ve been recommending in this volatile backdrop, and we think we’re going to have quite a bit of volatility.”
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Data from the Department of Labor released Thursday morning showed 223,000 initial jobless claims were filed in the week ending March 15, down from 221,000 the week prior and roughly in line with 224,000 economists had expected.
Meanwhile, 1.89 million continuing unemployment claims were filed, up from 1.86 million the week prior. Continuing claims have hovered near a more-than-three-year high for several months now as economists have noted laid-off workers are taking longer to find new jobs.
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