© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 13, 2023. REUTERS/Brendan McDermid/File Photo

By Stephen Culp

NEW YORK (Reuters) -U.S. stocks rose on Thursday, paring the previous day’s losses, as economic data fueled optimism that the Federal Reserve would ease monetary policy and revived investor risk appetite.

All three major U.S. stock indexes were higher, with surging chip stocks led by Micron Technology (NASDAQ:) after its better-than-expected quarterly forecast, putting the tech-heavy Nasdaq () out front.

Data on Thursday showed third-quarter U.S. economic growth was not as robust as originally stated, and cracks are appearing in the tight labor market, which the Fed considers an obstacle to cooling inflation.

U.S. stocks abruptly sank late Wednesday afternoon, snapping a multi-session rally, possibly accelerated by hedging activity associated with short-dated option trades.

“After a breather yesterday, the economic data further underscored investor confidence that the Fed is now on a rate cut track,” said Greg Bassuk, chief executive officer at AXS Investments in New York. “The investor narrative yesterday was about profit taking on the heels of a very long consistent holiday rally.”

“Investors would be prudent to buy on these dips,” Bassuk said, adding that he believes stocks “will end the year strongly.”

Financial markets are pricing in a 71.3% likelihood that the U.S. central bank with reduce the Fed funds target rate by 25 basis points as soon as March, according to CME’s FedWatch tool.

The market is awaiting the Commerce Department’s personal consumption expenditures (PCE) report due on Friday, which will cover income growth, consumer spending and inflation.

At 2:25 p.m., the rose 152.83 points, or 0.41%, to 37,234.83, the gained 24.66 points, or 0.52%, at 4,723.01 and the Nasdaq Composite added 109.88 points, or 0.74%, at 14,887.82.

Of the 11 major sectors of the S&P 500, consumer discretionary stocks enjoyed the biggest percentage gains.

Micron Technology forecast quarterly revenue above market estimates, and its shares jumped 7.3% on signs of a memory chip recovery in 2024 after one of the most significant downturns in years.

The Philadelphia SE semiconductor index housing chip stocks advanced 2.0%.

U.S. electric vehicle makers Tesla (NASDAQ:), Lucid Group (NASDAQ:) and Rivian (NASDAQ:) Automotive rose between 2.1% and 2.4% after a report said the United States was considering tariff hikes on Chinese EV manufacturers.

Triumph Group (NYSE:) soared 32.1% after the aerospace supplier said it would sell its components aftermarket business to AAR (NYSE:) Corp for $725 million.

U.S.-listed shares of Blackberry (TSX:) tumbled 13.8% after its fourth-quarter revenue estimates landed below expectations.

Advancing issues outnumbered decliners on the NYSE by a 2.54-to-1 ratio; on Nasdaq, a 2.17-to-1 ratio favored advancers.

The S&P 500 posted 13 new 52-week highs and one new low; the Nasdaq Composite recorded 57 new highs and 54 new lows.

Original: Stock Market News: Wall St rebounds from steep sell-off with boost from chips By Reuters