US equity markets recovered on Thursday, with the Dow Jones Industrial Average gaining 0.53% to 51,733 points, the S&P 500 advancing 0.94% to 7,623 points, and the technology-heavy Nasdaq 100 rising 1.31% to 29,323 points.
The gains came after Wednesday's sell-off following the Federal Reserve's decision to raise interest rates — the first increase in three years. While the move was widely expected, initial sentiment had turned negative heading into the close. By Thursday morning, investors appeared to have digested the decision, with particular approval directed at Fed chair Kevin Warsh's visible commitment to curbing inflation and maintaining the central bank's independence from political influence.
"The Fed is defending its credibility," said Michael Heise, chief economist at HQ Trust.
A key tailwind was the continued decline in oil prices, which had surged recently before retreating. The pullback had already begun supporting equities by Wednesday, ahead of the Fed announcement. Markets continue to price in the possibility that a major oil pipeline in Saudi Arabia could resume operations in the near term, easing supply concerns.
However, some analysts cautioned against complacency. "I wouldn't call it all-clear yet," said Haris Khurshid, investment strategist at hedge fund Karobaar Capital. While restored pipeline capacity would return some supply to the market, he warned there is little buffer for unexpected disruptions.
The Dow's recovery followed a sharp decline on Wednesday, when the rate decision weighed on sentiment. The S&P 500 also showed weakness midweek before stabilizing, while the Nasdaq 100 managed only a marginal gain after the Fed's announcement before extending its advance on Thursday.
