U.S. Stock Futures Rebound After Fed’s Interest-Rate Forecast

U.S. stock futures showed signs of recovery on Friday after a period of decline, which was triggered by the Federal Reserve’s recent interest-rate forecast for next year.

Market Overview

  • Dow Jones Industrial Average futures (YM00, +0.03%) fell 7 points, or 0%, to 34,330.
  • S&P 500 futures (ES00, +0.15%) gained 5 points, or 0.1%, reaching 4,377.
  • Nasdaq 100 futures (NQ00, +0.35%) increased by 46 points, or 0.3%, to 14,908.

On Thursday, the Dow Jones Industrial Average (DJIA) experienced a decline of 370 points, or 1.08%, reaching 34,070. The S&P 500 (SPX) also declined by 72 points, or 1.64%, settling at 4,330. Additionally, the Nasdaq Composite (COMP) saw a drop of 245 points, or 1.82%, to 13,224.

Over the last three days, the S&P 500 has witnessed a significant decrease of 2.8%.

Factors Influencing the Market

Finally, there seems to be some stability in the stock market as it attempts to recover from the Federal Reserve’s decision. The recent decision involved maintaining interest rates but adjusting the expected 2024 rates higher by half a point.

Thursday brought some positive news when reports indicated an unexpected decline in jobless claims. This was instrumental in causing the 2-year Treasury yield (BX:TMUBMUSD02Y) to reach its highest point since 2006. Similarly, the 10-year Treasury yield (BX:TMUBMUSD10Y) experienced its highest yield since 2007.

Saxo Bank strategists commented on the impact of the Federal Reserve’s message, stating that it led to Wall Street’s worst decline in six months. With 10-year benchmark Treasury yields hitting 4.5% for the first time since 2007, the possibility of rate cuts in the future has diminished to just 75 bps.

Despite a bearish trend, both the S&P 500 and Nasdaq 100 closed at technical support levels. This sets the stage for a minor rebound.

Adding to the week of central bank decisions, the Bank of Japan announced that it would maintain its ultra-loose monetary policy stance. This decision caused some gains for the dollar against the yen (USDJPY, +0.48%).

The U.S. economics calendar highlights preliminary readings of the manufacturing and services purchasing managers index, in addition to an artificial-intelligence conference where Fed Gov. Lisa Cook will be delivering a speech.

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