The Federal Reserve's dovish stance combined with expectations of eased tariffs leads to a strong three-day rally in US stocks

According to Zhitong Finance APP, on Thursday, the U.S. stock market rose for the third consecutive trading day, led by technology stocks, as the market digested comments from Federal Reserve officials and expectations for interest rate cuts increased. Major stock indices continued to rise following the possibility that Trump might cancel some of the most severe tariffs. Danni Hewson, head of financial analysis at AJ Bell, stated, "For a market that has happily become accustomed to a period of exceptionalism, what is needed to truly return to normalcy is the certainty that seems to be beyond Trump’s reach."

The S&P 500 index rose by 2.03%, and the Nasdaq 100 index increased by 2.74%. Data showed that the S&P 500 index has risen at least 1.5% for three consecutive days, marking the longest stretch of daily gains of 1.5% since 1974. The Chicago Board Options Exchange VIX volatility index hovered around 26. Among individual stocks, IBM (IBM.US) fell by 6.6%, as the company's latest financial report failed to satisfy investors. Agricultural equipment retailer Tractor Supply (TSCO.US) saw its stock price drop by 3.4% after the company cut large expenditures and lowered its expectations.

David Laut, chief investment officer of investment firm Abound Financial, stated, "Now that the market has recovered a significant portion of its losses, it can begin to sustain this momentum. While the market's recovery will not be a straight line, it is encouraging to see the market starting to price in the environment following the tariff cancellations."

Meanwhile, bets on an earlier-than-expected interest rate cut by the Federal Reserve boosted the stock market. Federal Reserve Governor Christopher Waller stated on Thursday that he would support a rate cut if tariffs lead to job losses. Cleveland Fed President Beth Hammack, in an interview, indicated that officials might take action as early as June if there is clear evidence of economic trends.

In terms of economic data, the number of unemployment claims rose slightly, reflecting a stable labor market. In March, U.S. existing home sales experienced the largest decline since 2022. Investors are also closely watching a series of earnings reports that paint a troubling picture. IBM's stock price fell due to disappointing earnings, as the company indicated that economic uncertainty and U.S. government cost-cutting could impact its business. PepsiCo (PEP.US) shares dropped after the company unusually reported earnings per share below expectations and lowered its full-year profit forecast due to global trade uncertainties.

However, the stock market's reaction to guidance changes was not entirely negative. Despite a decline in quarterly sales for the first time in nearly five years and a lowered full-year forecast, Chipotle Mexican Grill (CMG.US) saw its stock price rise. American Airlines Group (AAL.US) canceled its annual profit forecast, yet the company's stock price still climbedMark Hackett of the Bank of England stated, "The management provided cautious or no guidance, although this was widely expected by the market, and the market reaction has been encouraging."

Hackett added that this contrasts sharply with the past few years when the market had "heightened expectations but a lukewarm response" as it entered earnings season. He noted that after several weeks of turbulence, investors "expect market sentiment to stabilize."