US stock futures inch lower after hawkish Fed rattles Wall St
Investing.com– U.S. stock index futures edged lower on Thursday evening after Wall Street steadied from a slump in the previous session when the Federal Reserve indicated a slower pace of easing for next year.
The Fed lowered interest rates by 25 basis points on Wednesday, but its forecast of fewer-than-expected cuts in 2025 led to a sharp fall in all three major indexes.
S&P 500 Futures inched 0.2% lower to 5,922.0 points, while Nasdaq 100 Futures fell 0.3% to 21,312.55 points by 19:39 ET (00:39 GMT). Dow Jones Futures edged 0.2% lower to 42,709.0 points.
Fed’s hawkish tilt weighs, investors assess weekly jobs, revised GDP
The Fed’s cut on Wednesday brought the borrowing rate down to a range of 4.25%-4.50%, although policymakers forecasted just two rate cuts in 2025, compared with a prior forecast of four cuts.
Chair Jerome Powell said that further reductions depend on progress in curbing persistent inflation, reflecting policymakers’ adjustments to potential economic shifts under the incoming Donald Trump administration.
Traders are now expecting only a single quarter-point reduction in 2025 amid continued economic resilience and still-elevated inflation.
Data on Thursday showed that initial jobless claims fell more than expected last week, suggesting a gradual labor market slowdown was in place.
Other data showed that the U.S. economy grew at a faster pace than previously estimated in the third quarter, backing the Fed’s view of resilient economic growth.
Wall Street steadies after slump, govt shutdown nears
Wall Street indexes rebounded earlier on Thursday, following a slump on Wednesday, but closed largely unchanged as investors were still assessing the implications of the Fed’s hawkish tone.
The prospects of rates remaining higher for longer than expected had sent Wall Street indexes sharply lower on Wednesday, with heavy losses in the tech sector.
Technology stocks covered some of the ground they lost in the previous session but were still lower.
Bucking the trend, NVIDIA Corporation (NASDAQ:NVDA) stock rose 1.3%, while Tesla Inc (NASDAQ:TSLA) fell nearly 1%, and Intel Corporation (NASDAQ:INTC) lost nearly 1.2%. Broadcom Inc (NASDAQ:AVGO) shares fell 2.3% on Thursday.
Micron Technology Inc (NASDAQ:MU) shares plunged nearly 17%, a day after issuing weaker-than-expected earnings guidance.
The S&P 500 ticked down 0.1% to 5,867.08 points, while the NASDAQ Composite fell slightly to 19,369.58 points.
The Dow Jones Industrial Average was marginally higher at 42,342.24 points, barely falling short of its 11th consecutive session of declines.
On Thursday, the U.S. House of Representatives decisively voted down a Republican-backed funding proposal intended to prevent a government shutdown. Government funding is due to expire at midnight on Friday.
If legislators do not meet the deadline, the government will enter a partial shutdown, disrupting funding for activities ranging from border security to national parks and halting pay for over 2 million federal employees.
A potential shutdown could impact Christmas travel in addition to other public services.