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Stock futures rise slightly after Fed hikes rates to highest since 1994

U.S. stock index futures were slightly higher overnight on Wednesday after the Federal Reserve implemented the biggest interest rate hike since 1994.

Dow Jones Industrial Average futures added 0.22%. S&P 500 futures rose 0.23%, while Nasdaq 100 futures rose 0.29%.

Major averages ended Wednesday’s session higher, with the Dow Jones and S&P 500 both posting five-day losing streaks. The 30-stock benchmark added about 304 points, or 1%, while the S&P 500 rose 1.46%. The tech-heavy Nasdaq Composite outperformed, rising 2.5%.

The Federal Reserve announced a 75 basis point rate hike on Wednesday, widely anticipated by the market.

“Obviously, today’s 75 basis point increase is unusually large, and I don’t expect moves of this magnitude to be common,” the Federal Reserve Chairman said. Jerome Powell, at a press conference after the decision.

Stocks rose after Powell said a 50 or 75 basis point increase “looks most likely” at the next meeting in July, indicating the central bank’s commitment to fighting inflation. Powell warned, however, that decisions would be made “meeting by meeting.”

Individual member forecasts show that the Fed’s benchmark rate is now on track to end the year at 3.4%.

“At this point, the market has done a lot of the Fed’s job for them in terms of selling stocks and bonds over the past week – let alone all year – so it’s not not so surprising that both markets were up today (higher stock and bond prices; lower bond yields), given that they had sold so much before today’s meeting,” said Chris Zaccarelli , Chief Investment Officer for Independent Advisor Alliance.

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Despite Wednesday’s rebound, the major averages are still lower over the past week and month and remain well below their record highs.

The S&P 500 and Nasdaq Composite are both in bearish territory, down about 21% and 32% from their all-time highs in January and November, respectively. The Dow, meanwhile, is 17% below its all-time intraday high on Jan. 5.

Creeping inflation, which is at its highest level in 40 years, weighed on major averages, as did fears of slowing economic growth and the possibility of a recession.

“The market was very prepared, even late in the story,” Morgan Stanley chief U.S. equity strategist Michael Wilson said following news of the 75 basis point hike. “There is relief here,” he noted, before adding that the hike will not solve the inflation problem overnight.

“It also increases the risk of a recession because you’re bringing forward rate hikes even faster, and I don’t think that’s going to help the bond market,” he said on CNBC’s “Closing Bell Overtime.”

Economic data released on Thursday includes the weekly number of jobless claims, with economists polled by Dow Jones forecasting a print of 220,000. Housing starts will also be released, while Adobe and Kroger will release quarterly updates.

Stock futures rise slightly after Fed hikes rates to highest since 1994

Source link Stock futures rise slightly after Fed hikes rates to highest since 1994

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