Stock futures were slightly higher on Wednesday night after losses during the daily trading session after the US Federal Reserve announced another rate hike and signaled no reversal or rate cut any time soon.
Futures tied to the Dow Jones Industrial Average rose 63 points, or 0.2%. S&P 500 futures and Nasdaq 100 futures were up 0.25% and 0.33%, respectively. Qualcomm, Roku and Fortinet shares fell after releasing disappointing quarterly results and guidance.
Traders had anticipated the central bank’s 0.75 percentage point rate hike and initially read the Fed’s statement as dovish, sending shares higher.
Those gains were reversed when Federal Reserve Chair Jerome Powell said it was “premature” to talk about a pause in rate hikes and that the final rate was likely to be higher than previously indicated.
Traders react as Federal Reserve Chair Jerome Powell speaks on a screen on the floor of the New York Stock Exchange (NYSE) in New York City on November 2, 2022.
Brendan McDermid | Portal
“We still have some way to go and the data coming in since our last meeting suggests that the final interest rate level will be higher than previously expected,” he said.
The Dow Jones Industrial Average ended Wednesday’s trading session 416 points lower, or 1.3% lower, mitigating its sharp October rally. The S&P 500 fell 2% and the Nasdaq Composite fell 2.8%.
Markets will likely continue to bob until it is clear that inflation has cooled and the Fed has stopped hiking rates higher. Any data showing that the US economy is not slowing as the central bank tightens policy is likely to weigh on stocks.
The next important report is the non-farm payrolls for October, due for release on Friday.
“You get a good employment number, in other words a good unemployment rate that doesn’t go up, then the market is in big trouble,” said Guy Adami, director of advisor representation at Private Advisor Group, on CNBC’s Fast Money.