US stock index futures soar; Fed cut, jobless claims help
Investing.com–U.S. stock index futures surged Thursday in the wake of the Federal Reserve starting its easing cycle with a substantial half percentage point reduction.
At 05:45 ET (09:45 GMT), Dow Jones Futures rose 475 points, or 1.2%, S&P 500 Futures gained 85 points, or 1.5%, and Nasdaq 100 Futures climbed 390 points, or 2%.
Fed announces bumper cut, more easing likely
The central bank’s Wednesday cut– its first since 2020- was at the higher end of market expectations.
The reduction marks the beginning of an easing cycle that is likely to see rates fall further in the coming months. The Fed said a bulk of policymakers expect two more 25 bps cuts this year, but markets expect more.
Citi expects the Fed to cut rates by another 50 bps in its November meeting.
Don’t hold out for ultra-low rates – Powell
Still, enthusiasm over the future cuts was limited by Powell stating that the Fed did not intend to return to an era of ultra-low interest rates. The central bank had slashed rates to near negative levels to offset the impact of the COVID-19 pandemic.
The Fed chair said the central bank’s neutral rate was likely to be significantly higher than it was in the past, although he did not specify just how much.
FedEx earnings due
There are more earnings to digest Thursday, including from Darden Restaurants (NYSE:DRI), shipping giant FedEx (NYSE:FDX), and homebuilder Lennar Corporation (NYSE:LEN).
Dell Technologies (NYSE:DELL) stock added over 3% after the PC-maker declared a quarterly cash dividend.
Traders will also watch out for August’s existing home sales and the latest weekly jobless claims.
Crude rises after Fed cut
Crude prices rose after the large Fed interest rate cut raised hopes of increased economic activity in the world’s largest consumer, but concerns over global demand lingered and capped gains.
By 03:45 ET, the Brent contract gained 1.3% to $74.59 per barrel, while U.S. crude futures (WTI) traded 1.4% higher at $70.87 per barrel.
US government data released on Wednesday showed a bigger-than-expected, 1.63 million barrel draw in inventories.
While the draw was much bigger than expectations for a draw of 0.2 mb, it was also accompanied by builds in distillates and gasoline inventories.
(Ambar Warrick contributed to this article.)