US stock index futures jumped during overnight trading on Wednesday after the Federal Reserve imposed the biggest interest rate hike since 1994.
Futures contracts tied to the Dow Jones Industrial Average added 0.58%, or about 170 points. S&P 500 futures were up 0.74%, while Nasdaq 100 futures were up 0.77%.
Key Average Finished Wednesday’s session higher, a five-day losing streak with both the Dow and the S&P 500. The 30-stock benchmark added about 304 points, or 1%, while the S&P 500 advanced 1.46%. The tech-heavy Nasdaq Composite was the relative outperformer, rising 2.5%.
The Federal Reserve announced on Wednesday 75 basis points rate hikeWhich was widely speculated in the market.
“Clearly, today’s increase of 75 basis points is unusually large, and I don’t expect a move of this size to be normal,” the Federal Reserve chairman said. Jerome Powell Said at a press conference after the decision.
Stocks take a leg up after Powell says A 50 or 75 basis point increase “seems most likely” At the next meeting in July, reflects the central bank’s commitment to fighting inflation. Powell cautioned, however, that decisions would be made “meeting by meeting.”
Individual members’ forecasts suggest the Fed’s benchmark rate is now On track at year-end at 3.4%,
“The markets at this point have done a lot of the Fed’s work for them in terms of stock and bond sales over the past week — not to mention the full year — so it’s not surprising that both markets moved higher today.” (stock and bond prices went up; bond yields low), given that they had sold a lot when they came to today’s meeting,” said Chris Zacarelli, chief investment officer at the Independent Advisors Alliance.
Despite Wednesday’s surge, key averages are still lower than last week and month, and well below their records.
The S&P 500 and Nasdaq Composite are both in bear market territory, down about 21% and 32% from their all-time highs in January and November, respectively. Meanwhile, the Dow is down 17% from its January 5 all-time high.
Large-scale inflation, which is at the highest level in 40 years, weighed on the key average, as fears about slowing economic growth and the prospect of a recession.
“The market was very ready, even late to the story,” said Michael Wilson, chief US equity strategist at Morgan Stanley, after announcing the 75 basis points hike. “Here is the relief,” he said, adding that the hike will not solve the inflation problem overnight.
“It also increases bearish risk because you’re going to push rates up even more quickly, and I don’t think that’s going to help the bond market,” he said on CNBC. “Closing Bells.”
Thursday’s economic data includes the number of weekly jobless claims, with economists surveyed by the Dow Jones predicting a print of 220,000. Housing Start will also be issued, while adobe And kroger Will report updated quarterly.