Newshub18 :If the Fe d raises rates the most since 1994, stock futures are up an inch
U.S. stock index futures traded slightly higher on Wednesday night after the Federal Reserve implemented the biggest interest rate hike since 1994.
The Dow Jones Industrial Average added 0.22% to the futures contract. The S&P 500 futures rose 0.23%, while the Nasdaq 100 futures rose 0.29%.
The main average Wednesday session ended higher, with both the Dow and the S&P 500 snaping a five-day losing streak. The 30-stock benchmark added about 304 points, or 1%, while the S&P 500 advanced 1.46%. The tech-heavy Nasdaq composite was a relative outperformer, up 2.5%.
The Federal Reserve on Wednesday announced a 75 basis point rate hike, which was widely expected by the market.
“Obviously, today’s 75 basis point increase is an unusually large one, and I don’t expect measures of this size to be commonplace,” Federal Reserve Chairman Jerome Powell told a news conference after the decision.
Powell said stocks rose one foot after a 50 or 75 basis point increase in the next meeting in July “seems likely” indicating the central bank’s commitment to fighting inflation. Powell was cautious, but the decision was made “by meeting.”
Individual members’ forecasts indicate that the Fed’s benchmark rate is now approaching the end of the year at 3.4%.
“Right now the market has done a lot for the Fed in terms of selling stocks and bonds over the last week – not to mention the whole year – so it’s not surprising that both markets are higher today (stocks and bonds) are higher; The yield on bonds is low), given that they’ve sold out so much at today’s meeting, “said ChrisJacqueline, chief investment officer of the Independent Advisory Alliance.Stock picks and investment trends from CNBC Pro:
Despite Wednesday’s bounce, major averages are still lower than last week and month, and are sharply lower than their record.
Both the S&P 500 and Nasdaq Composite are in beer market territory, down 21% and 32% from their all-time highs in January and November, respectively. Dow, meanwhile, is down 17% on its January 5 all-time intraday high.
Massive inflation, which is at its highest level in 40 years, has weighed on the major averages, as economic growth slows and recession is expected.
“The market was very ready, even late in the story,” said Michael Wilson, Morgan Stanley’s chief U.S. equity strategist, after announcing a 75 basis point increase. “There is relief here,” he said, noting that inflation would not solve the problem of overnight inflation.
“It also increases the risk of a recession because you’re raising rates faster, and I don’t think that will help the bond market,” he told CNBC’s “Closing Bell”.
Economic data released Thursday includes the number of weekly unemployment claims, with economists forecasting 220,000 prints surveyed by the Dow Jones. Housing Startups will also be published, while Adobe and Kroger will report quarterly updates.
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