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U.S. stock index futures edged higher Thursday, recovering some losses from Wednesday’s sharp sell-off after the Federal Reserve signaled a slower pace of rate cuts in 2025.
At 06:00 ET (11:00 GMT), Dow Jones Futures rose 140 points (+0.3%), S&P 500 Futures gained 21 points (+0.4%), and Nasdaq 100 Futures climbed 87 points (+0.4%).
Market Recap: Wednesday’s Sell-Off
Wall Street experienced a sharp downturn on Wednesday following the Fed’s announcement of a more cautious path to monetary easing. Technology stocks were hit particularly hard:
- The Dow Jones Industrial Average fell over 1,000 points (-2.6%), marking its longest losing streak since 1974 with ten consecutive declines.
- The S&P 500 dropped 3%.
- The Nasdaq Composite plummeted 3.6%.
Fed Policy Updates
The Federal Reserve reduced interest rates by 25 basis points to a range of 4.25%–4.50%, consistent with expectations. However, officials projected only two additional rate cuts in 2025, a reduction from the four cuts forecasted in September.
Chair Jerome Powell emphasized the Fed’s commitment to combating inflation, which remains above the 2% target. Projections now estimate inflation will close 2024 at 2.4% and 2025 at 2.5%, suggesting a prolonged fight against price pressures.
The Fed’s updated projections also reflected a brighter outlook for economic growth and lower unemployment next year compared to their September estimates.
Key Economic Data on the Horizon
Investors are now turning their attention to a series of economic reports set to be released on Thursday:
- Third-Quarter GDP: Expected to show annualized growth slowing to 2.8% from 3.0% in the previous quarter.
- Weekly Jobless Claims: Offering further insights into labor market resilience.
- Existing Home Sales for November and the December Philadelphia Fed Manufacturing Index will also be closely monitored.
Corporate News: Micron, Tesla, and Nvidia
- Micron Technology (NASDAQ:MU): Shares plunged 15% premarket after the semiconductor company issued weaker-than-expected second-quarter guidance, signaling ongoing challenges in the tech sector.
- Tesla (NASDAQ:TSLA) and Nvidia (NASDAQ:NVDA): Both gained around 2% in premarket trading, recovering slightly from Wednesday’s heavy losses.
Oil Prices Slide Amid Fed’s Hawkish Tone
Oil prices declined on Thursday as concerns over slower global economic growth and a stronger U.S. dollar weighed on demand outlooks.
- WTI crude futures: Fell 0.9% to $69.96 a barrel.
- Brent crude: Edged lower by 0.1% to $73.33 a barrel.
The Federal Reserve’s hawkish stance has raised fears of reduced fuel consumption in the world’s largest economy. Additionally, a stronger dollar, now at a two-year high, has made dollar-denominated oil more expensive for international buyers.
Adding to the bearish sentiment, U.S. crude inventories fell by 934,000 barrels last week, according to the Energy Information Administration. While a drawdown, the figure missed analysts’ expectations of a 1.6 million-barrel decrease.
Outlook
Investors will closely watch upcoming economic data to assess the broader impact of the Fed’s revised monetary policy and whether corporate earnings and economic indicators justify optimism for the coming quarters. While futures point to a mild rebound, underlying risks remain as markets digest the implications of higher-for-longer interest rates and persistent inflation pressures.
