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Micron, Lennar ( LEN ) fall after results

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Banks firm as U.S. bond yields rise

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Q3 GDP revised higher

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Indexes up: Dow 0.56%, S&P 500 0.48%, Nasdaq 0.52%

(Updates to mid-afternoon trading)

By Chuck Mikolajczak

NEW YORK, Dec 19 (Reuters) - U.S. stocks rose on

Thursday, bouncing modestly from a sharp drop in the prior

session after the Federal Reserve forecasts fewer-than-expected

interest rate cuts and higher inflation next year.

Economic data seemed to back up the Fed's view, with weekly

initial jobless claims falling more than expected while gross

domestic product for the third quarter was revised to show a

3.1% increase from the previously reported 2.8% pace.

"It clearly sent a message that rates weren't going to keep

going down if inflation didn't continue its decline, and we've

seen inflation tick up a bit here, and that's a concern to the

Fed," said Tim Ghriskey, senior portfolio strategist at Ingalls

& Snyder in New York.

"Today you would have expected, given the sell-off and the

sharpness of it, you'd see a bounce today, and we are seeing

one, it just isn't with a lot of conviction here."

The Dow Jones Industrial Average rose 235.23

points, or 0.56%, to 42,561.75, the S&P 500 gained 28.11

points, or 0.48%, to 5,900.05 and the Nasdaq Composite

gained 99.50 points, or 0.52%, to 19,492.13.

The Dow was on track to snap a ten-session losing skid, its

longest streak since 1974.

The Dow and S&P 500 suffered their biggest one-day

percentage drop since early August, while the Nasdaq suffered

its biggest daily fall since July after the Fed on Wednesday

said it expects to make just two 25 basis point cuts in 2025,

half a percentage point less than its September forecast for the

first year of the new Trump administration.

Traders now see just one quarter-point rate reduction by

mid-2025, and see less than two cuts in total by the end of the

year, compared with last week's expectations of three rate cuts.

Longer-dated Treasury yields were higher after the economic

data, with the benchmark 10-year note reaching a

near 7-month high of 4.594%.

The CBOE volatility index, Wall Street's fear gauge,

eased to 23.22 points after hitting a five-month high of 28.32 a

day earlier.

Bank stocks rose 0.6% as a rise in yields tends to

improve the profitability of lenders, while the incoming Trump

administration is expected to loosen regulations on the sector.

Micron slumped 16.5% following its forecast of

quarterly revenue and profit below estimates.

Homebuilder Lennar ( LEN ) lost 4.6% after reporting

fourth-quarter results below estimates, pulling the PHLX housing

index down by 2.1%.

Declining issues outnumbered advancers by a 1.44-to-1 ratio

on the NYSE but advancers outnumber decliners by a 1.02-to-1

ratio on the Nasdaq.

The S&P 500 posted two new 52-week highs and 39 new lows,

while the Nasdaq Composite recorded 27 new highs and 242 new

lows.