Wall St set for higher open after selloff following Fed's hawkish cut
For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window.
Micron plummets after downbeat quarterly forecast
Lennar down after Q4 results come in below estimates
Futures up: Dow 0.82%, S&P 500 0.81%, Nasdaq 0.75%
Updates before markets open
By Medha Singh and Purvi Agarwal
Dec 19 (Reuters) - Wall Street's main indexes were set for a higher open onThursday, a day afterthe Federal Reserve's projections of fewer-than-expected interest rate cuts and higher inflation next year wrong-footed some investors andpummeled U.S. stocks.
The Fed on Wednesday said it expects to make just two 25 basis point cuts in 2025, half a percentage point less than its September forecast and raised inflation expectations for the first year of the new Trump administration, sending the three main U.S. stock indexes to their sharpest daily declines since August.
Traders now see just one quarter-point rate reduction by mid-2025, and see less than two cuts in total by the end of the year, compared with last week's expectations of three rate cuts.
"The market tends to 'pop after a drop' but I wouldn't be surprised if we end up giving back much of the gains toward the end of the day because investors don't want to be over exposed over the weekend," said Sam Stovall, chief investment strategist of CFRA Research.
The benchmark S&P 500 .SPX hit a near one-month low on Wednesday as investors adjusted their risk exposure to reflect the impact of higher borrowing costs in 2025, while the Dow .DJI dropped for the tenth straight session, its longest streak of losses since 1974.
At 8:37 a.m. ET, Dow E-minis 1YMcv1 were up 347 points, or 0.82%, S&P 500 E-minis EScv1 were up 48 points, or 0.81% and Nasdaq 100 E-minis NQcv1 were up 160 points, or 0.75%.
The hawkish shift from the Fed comes just three months after the U.S. central bank began its monetary easing cycle with a larger-than-usual 50 basis point interest rate cut that spurred risk appetite and helped push Wall Street to record levels.
"Projecting only two rate cuts next year indicates that the Fed acknowledges the ongoing 'remarkable' strength of U.S. economic conditions and suggests that further reductions in their policy rate may not be necessary," said JoAnne Bianco, partner and investment strategist at Bondbloxx.
Meanwhile, data on the day showed gross domestic product for the third quarter wasrevised up at 3.1%, from 2.8% earlier, while the number of Americans filing new applications forjobless benefits fell more than expected last week, consistent with a gradual cooling in labor market conditions.
The CBOE volatility index .VIX, Wall Street's fear gauge, eased to 21.27 points from a four-month high of 28.32 a day earlier.
Stocks broadly recovered someground in premarket trading from sharp losses on Wednesday. Megacap Tesla TSLA.O and Nvidia NVDA.O gained over 2% each.
Among corporate news, Micron MU.O slumped 11.7% after its forecast of quarterly revenue and profit below estimates.
Accenture ACN.N gained nearly 5% as the IT services provider beat Wall Street estimates for first-quarter revenue, while homebuilder Lennar LEN.N shed 8% after reporting fourth-quarter results below estimates.
Vertex Pharmaceuticals VRTX.O tumbled 11% after the company said its experimental non-opioid drugshowed little difference versus a placebo in reducing pain in a mid-stage study.
Reporting by Medha Singh and Purvi Agarwal in Bengaluru; Editing by Maju Samuel
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
