Stock futures showed little movement on Wednesday night as investors continued to process the impact of the Federal Reserve’s revised outlook on interest rates, CNBC reports.
The market had seen significant volatility earlier in the day after the Fed signaled a more cautious approach to rate cuts in 2024, dashing expectations of a more aggressive monetary easing.
Futures tied to the Dow Jones Industrial Average were up by 62 points, or 0.15%, while S&P 500 futures traded near the flat line. Nasdaq 100 futures saw a slight decline of 0.18%.
The market faced heavy losses on Wednesday, following the Federal Reserve’s decision to reduce its forecast for interest rate cuts next year. The central bank indicated it was likely to cut rates only twice in 2024, down from previous expectations of four cuts. In addition, the Fed raised its benchmark borrowing rate by a quarter percentage point, bringing it to a range of 4.25% to 4.5%. Investors had been anticipating a more aggressive approach to rate reductions, which had contributed to a sharp selloff in stocks.
“The big jump in inflation expectations and related bond selloff was a convenient excuse. Once support from tech evaporated, no other groups were able to step in to fill that gaping hole,” said Jeff Buchbinder, chief equity strategist at LPL Financial, commenting on the market’s sharp decline.
The Dow Jones Industrial Average fell by 1,123.03 points, or 2.58%, marking its 10th consecutive loss — the longest losing streak for the index since 1974. This drop brought the index to 42,326.87 and put it on track for its worst weekly performance since March 2023. The S&P 500 also saw a significant decline, shedding 2.95% to 5,872.16, while the Nasdaq Composite lost 3.56%, ending at 19,392.69. These losses were exacerbated as tech stocks, a key driver of the market in recent years, faced significant pressure.
Following the Fed’s cautious stance, US Treasury yields surged, with the 10-year yield rising more than 13 basis points to exceed 4.50%. The Cboe Volatility Index, known as Wall Street’s “fear gauge,” also spiked, signaling heightened investor uncertainty regarding the future direction of interest rates.
In after-hours trading, shares of Micron Technology dropped approximately 13% after the company issued weaker-than-expected guidance for its second-quarter performance.
As markets around the world reacted to the Fed’s policy shift, European and Asian markets also faced losses. The pan-European Stoxx 600 index fell 1.26%, with major European bourses such as Germany’s DAX and France’s CAC 40 declining by more than 1%. Asian markets were similarly impacted, with Japan’s Nikkei 225 and South Korea’s Kospi posting losses.
