Stock Futures – Stock futures are higher after the S&P 500, closing the Dow notch record
Futures contracts related to major U.S. stock indexes were high after the Federal Reserve said it did not expect interest rates to rise until 2023 just hours before Wednesday night’s session.
Fed Chairman Jerome Powell reiterated that the Central Bank wants inflation in the U.S. labor market to be above 2 percent and material improvement before inflation rates change or monthly bonds are bought.
Dow futures have risen 45 points and are offering a similar magnitude when regular trading resumes on Thursday. S&P 500 and Nasdaq 100 futures added 0.15%.
The main message of Wednesday’s Fed meeting was that “the committee has to wait a very long time, even if the economic outlook is shining,” writes senior EU economist Eric Uinograd.
“The FOMC agrees with the market view that growth and inflation may resume as activity increases in 2021, but it does not consider activity growth to be sustainable,” he added.
The post-employment move comes after the stock market emerged during Powell’s remarks.
The rise forced the Dow Jones Industrial Average to rise from 33,000 to first place with a gain of 189 points. The S&P 500 also rose to a record high, rising 0.3% to 3,974 after falling 0.7% in Wednesday’s session.
The Nasdaq Composite, which fell 1.5 percent, eliminated initial losses and ended the day at 13,525.20, up 0.4 percent. High tech performance was under pressure on Wednesday morning as rising bond yields slowed growth stocks.
The Fed and its leader’s announcements on Wednesday eased investors ’concerns that it could give up its easy monetary policy sooner than expected after the Fed improved its economic outlook to reflect its expectations that it would strengthen.
The Fed said gross domestic product is expected to grow 6.5 percent in 2021 until it cools down in recent years, and inflation will grow 2.2 percent this year compared to personal consumption spending. The central bank’s goal is to keep inflation at 2 percent in the long run.
But Powell managed to convince traders that the Fed should see material and sustainable growth and a sharp drop in unemployment before discussing changes to its current easy policy stance.
The Fed “expects to continue an easy monetary policy in the near future to keep the policy rate at zero in the next few quarters and keep the policy rate at a much lower level for several years,” AB Winograd added. very long period. “
10-year Treasury yields rose to their highest level since the Central Bank renewal. The last time this figure was observed was at 1.646%. At the beginning of the session, the benchmark rate rose to 1.689%, reaching a level not seen since the end of January 2020.
Further higher rates hurt growth-oriented companies as they reduce the value of future cash flows.
For example, Tesla fell 3.8% on Wednesday before the Fed’s announcement, following an increase in long-term rates. Shares rose after the Fed’s release and ended the session at 3.6% due to a decline in yields.