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U.S. stock index futures climbed strongly on Thursday as investors digested the Federal Reserve’s rate cut and comments from Chair Jerome Powell on the outlook for future monetary policy.
Market Performance
At 05:45 ET (09:45 GMT), Dow Jones Futures rose 335 points (0.7%), S&P 500 Futures gained 55 points (0.9%), and Nasdaq 100 Futures climbed 245 points (1%).
The move followed a choppy Wall Street session on Wednesday that ended mixed, reflecting cautious sentiment immediately after the Fed’s announcement.
Fed Cuts Rates, Signals More to Come
The Fed lowered its benchmark federal funds rate by 25 basis points to 4.00%–4.25%, marking its first reduction since December. Updated projections indicated that most policymakers expect two more cuts in 2025, reflecting the need to support a cooling labor market while still managing sticky inflation risks.
Powell described the reduction as a “risk-management cut,” stressing that officials were seeking to guard against rising unemployment. He reiterated the Fed’s balancing act between curbing inflation and avoiding a sharper economic slowdown.
Division Within the Fed
The decision was not unanimous. Governor Stephen Miran dissented, calling for a deeper 50 bps reduction. His “dot” on the Fed’s projections was the most aggressive, forecasting rates as low as 2.875% by the end of 2025, well below the consensus outlook.
This dissent underlined the growing debate inside the Fed over how aggressively to respond to shifting conditions, with the labor market weakening but inflation risks persisting.
Market Outlook
Markets remain skeptical of the Fed’s relatively cautious projections. Futures traders are now pricing in two to three additional cuts this year, beyond what Fed officials outlined.
With the Fed focused squarely on the jobs market, attention on Thursday will turn to weekly initial jobless claims data, due later in the session. Last week’s spike in claims has heightened concerns about labor market fragility, making this release critical for market sentiment.
