U.S. stock futures rose on Thursday following a sharp sell-off in the wake of the Federal Reserve’s latest rate hike.
How are stock-index futures trading
-
S&P 500 futures
ES00,
+0.43%
rose 29 points, or 0.7%, to 3999 -
Dow Jones Industrial Average futures
YM00,
+0.16%
gained 162 points, or 0.5%, to 32240 -
Nasdaq 100 futures
NQ00,
+0.91%
advanced 132 points, or 1%, to 12839
On Wednesday, the Dow Jones Industrial Average
DJIA,
fell 530 points, or 1.63%, to 32030, the S&P 500
SPX,
declined 66 points, or 1.65%, to 3937, and the Nasdaq Composite
COMP,
dropped 190 points, or 1.6%, to 11670.
What’s driving markets
Stock futures were firmer on Thursday as investors reassessed the market’s negative reaction to events late in the previous session.
The S&P 500 on Wednesday had turned a greater than 1% gain into a 1.65% loss after traders were disheartened by Treasury Secretary Janet Yellen telling a Senate committee that “blanket” deposit insurance hadn’t been considered or discussed by her department.
Reports earlier in the week that the government was considering a wholesale backstop to bank deposits was considered an important factor in calming the financial sector and driving the latest stock market rally — so a denial of that potential support did not go down well with equity bulls.
Also damaging sentiment was lingering uncertainty over the trajectory of Federal Reserve policy. The Fed raised interest rates by 25 basis points to a range of 4.75% to 5% as the market expected, but Chair Jerome Powell made clear he disagreed with investors’ bets that the central bank will have cut rates to about 4.2% by the end of the year.
“Rate cuts are not in our base case,” Powell said.
The improvement in market sentiment on Thursday reflected a belief that Powell will be proven wrong, according to Stephen Innes, managing partner at SPI Asset Management.
“U.S. futures are nudging higher as the market bets the Fed loses its nerve and downshifts anyway. Note the modern-day history book of Fed pauses is very bullish for stocks,” Innes said.
Calmer conditions in bond markets were also supporting the mood, with the 10-year Treasury yield
TMUBMUSD10Y,
up just 2.6 basis points to 3.471%.
In addition a strong showing for Asian bourses on Thursday — the Hang Seng
HSI,
in Hong Kong rose 2.3% — was underpinning sentiment.
“Some relatively strong gains were recorded [in Asia], with investors choosing for the moment to focus on the possibility of stronger conditions in the region, propelled by the reopening of the Chinese economy. There was also something of a tailwind following better than expected results from Tencent, boosting earnings hopes for the broader corporate sector,” said Richard Hunter, head of markets at Interactive Investor.
U.S. economic updates set for release on Thursday include the weekly initial jobless claims report and the fourth-quarter U.S. current account numbers, both due at 8:30 a.m. Eastern. The February new home sales report will be published at 10 a.m.
