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US stocks rebounded modestly on Thursday, shaking off some of the gloom from a hawkish Federal Reserve meeting the previous day that had sent equities reeling around the world.

The S&P 500 rose 0.7 per cent in morning trading, suggesting investors were viewing the previous day’s nearly 3 per cent fall — its worst day since the market rout of early August — as an opportunity to reload on previous winning bets.

“Every dip is a buying opportunity right now,” said Steve Sosnick, chief global strategist at Interactive Brokers. “You could argue the selling was overdone, but to see the market bounce . . . just tells you traders are programmed to buy the dip regardless of the reason. ”

The tech-heavy Nasdaq Composite gained 0.7 per cent after dropping 3.6 per cent the previous day. All of the “Magnificent Seven” large tech stocks, whose gains have powered a large chunk of the S&P 500’s 24 per cent rally this year, advanced in early trading.

Thursday’s rally in US equities stood in contrast to markets in Europe and Asia, which sank following Wednesday’s US sell-off and remained weaker even as Wall Street turned around.

Europe’s benchmark Stoxx 600 was down 1.6 per cent and the UK FTSE 100 off 1.3 per cent on Thursday. Earlier, markets in India, Japan, South Korea and Hong Kong also closed in the red.

On Wednesday the Fed, as expected, reduced interest rates by a quarter-point but unsettled investors after raising its 2025 inflation forecasts and cutting back on its projections for further rate cuts. It was the central bank’s final meeting before President-elect Donald Trump takes office next month.

The dollar, meanwhile, held steady on Thursday after soaring to its highest level since November 2022, as measured against a basket of its trading peers, following the Fed’s policy meeting.

Dollar strength hurt emerging market currencies in particular, with the Indian rupee hitting a record low of Rs85.1 against the dollar. The Chinese renminbi slid, while South Korea’s won sank to a 15-year low.

“The rates backdrop from the US Fed is going to put even more pressure on emerging markets,” said Robin Gilhooly, senior emerging markets economist at Abrdn. “It will be a tough start to next year for emerging markets . . . but the contours of US policy won’t become clear for a while.”

Concerns about inflation stalling above 2 per cent contributed to Fed officials forecasting just half a percentage point worth of cuts in 2025, down from a full percentage point in their last projections in September.

In bond markets, the yield on the benchmark 10-year Treasury rose another 0.07 percentage points to 4.57 per cent, its highest in more than six months, after climbing markedly on Wednesday.

“The narrative has shifted from inflation in abeyance and downside growth risks, to the Fed acknowledging the economy is in a ‘really good place’ and seriously questioning how much further rates need to be cut after all,” said Chris Turner, global head of markets at ING.