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Micron plummets on downbeat quarterly forecast

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Accenture ( ACN ) up after beating Q1 revenue estimates

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Indexes up: Dow 0.94%, S&P 500 0.90%, Nasdaq 0.91%

(Updates after markets open)

By Medha Singh and Purvi Agarwal

Dec 19 (Reuters) -

Wall Street's main indexes regained some ground on Thursday,

a day after the Federal Reserve's projections of

fewer-than-expected interest rate cuts and higher inflation next

year wrong-footed some investors and pummeled U.S. stocks.

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 and raised inflation expectations for the

first year of the new Trump administration, sending the three

main U.S. stock indexes to their sharpest daily declines since

August.

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.

At 9:44 a.m. ET the Dow Jones Industrial Average rose

395.85 points, or 0.94%, to 42,722.72, the S&P 500 gained

52.72 points, or 0.90%, to 5,924.80 and the Nasdaq Composite

gained 176.89 points, or 0.91%, to 19,569.58.

The CBOE volatility index, Wall Street's fear

gauge, eased to 20.56 points from a four-month high of 28.32 a

day earlier, while the small-cap Russell 2000 was up

1.3%.

Most megacap and growth stocks recovered some ground,

with Tesla and Alphabet in the lead, gaining

2% and 1.7% respectively.

"The market tends to 'pop after a drop' but I wouldn't be

surprised if we end up giving back much of the gains towards the

end of the day because investors don't want to be over exposed

over the weekend," said Sam Stovall, chief investment strategist

of CFRA Research.

The benchmark S&P 500 had hit a near one-month low on

Wednesday as investors adjusted their risk exposure to reflect

the impact of higher borrowing costs in 2025. The Dow is

on track to snap its ten-session losing streak, its longest

since 1974.

The hawkish shift from the Fed comes just three months after

the U.S. central bank began its monetary easing cycle with a

larger-than-usual 50 basis point interest rate cut that spurred

risk appetite and helped push Wall Street to record levels.

"If the Fed stays elevated for a while then that could put

inflation back on a downward track and could allow for a

positive year (for markets)," said Stovall.

Meanwhile, data showed the U.S. economy grew

faster

than previously estimated in the third quarter, while

weekly

jobless claims

fell more than expected last week, consistent with a

gradual cooling in labor market conditions.

Micron slumped 17% after its forecast of quarterly

revenue and profit below estimates.

Accenture ( ACN ) gained nearly 7.2% as the IT services

provider

beat

Wall Street estimates for first-quarter revenue, while

homebuilder Lennar ( LEN ) shed 4.5% after

reporting

fourth-quarter results below estimates.

Vertex Pharmaceuticals ( VRTX ) tumbled 10.2% after the

company said its experimental non-opioid drug showed little

difference versus a placebo in reducing pain in a mid-stage

study.

Advancing issues outnumbered decliners by a 2.77-to-1

ratio on the NYSE and by a 2.61-to-1 ratio on the Nasdaq.

The S&P 500 posted two new 52-week highs and 18 new

lows, while the Nasdaq Composite recorded 11 new highs and 66

new lows.