Traders work on the floor of the New York Stock Exchange (NYSE) in New York City.
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Stock futures were little changed Wednesday night as investors digested a new, sobering reality for financial markets. Trading was volatile during the regular session as panic swirled around the Federal Reserve’s revision of its interest rate outlook for next year.
Futures linked to the Dow Jones Industrial Average An increase of 26 percentage points, or less than 0.1%. S&P Futures Traded slightly above flat, while Nasdaq 100 Futures Shedding 0.1%.
Stocks tumbled on Wednesday after the Federal Reserve dealt a heavy blow to a strong bull market by suggesting it might cut interest rates only twice next year, down from the four cuts it last predicted in September. The central bank also cut its benchmark overnight borrowing rate by a quarter of a percentage point on Wednesday to a target range of 4.25% to 4.5%, but the question now is what policymakers will do in 2025.
Jeff Buchbinder, chief equity strategist at LPL Financial, said in response to Wednesday’s plunge that “tight positioning and market sentiment have left stocks vulnerable to sell-offs.” “The sharp rise in inflation expectations and the related sell-off in bonds is a convenient excuse. Once technology’s Support disappeared and no other group could step in to fill the gap.”
Chairman Powell didn’t bring much immediate comfort to investors. “We’re at 4.3%, which is a meaningful limit and I think it’s a well-calibrated rate that allows us to continue to make gains on inflation,” Powell said at a news conference after the Fed meeting. progress while maintaining a strong labor market.
Ahead of Wednesday’s rate change, Wall Street is betting the Fed will remain more aggressive in lowering borrowing costs, which affects everything from how much it costs companies to raise capital to the cost for consumers to buy a new home or car.
However, with the adjustment of the Federal Reserve’s outlook, the Dow Jones Industrial Average fell 1,123.03 points, or 2.58%, to 42,326.87 points, falling for the 10th consecutive day, the longest decline since 1974, and is expected to hit the worst since March 2023 Weekly performance. The Dow Jones Industrial Average and 30 S&P 500 stocks all posted their biggest one-day losses since August, when the unwinding of yen carry trades rocked the market.
The Federal Reserve’s cautious outlook caused U.S. Treasury yields to rise sharply, further weighing on stocks. The 10-year Treasury yield rose more than 13 basis points to 4.50%.
The Chicago Board Options Exchange Volatility Index, known as Wall Street’s “fear gauge,” also surged, signaling increased investor uncertainty about the direction of interest rates.
In after-hours trading, Micron Technology The company’s shares fell about 13% after the chipmaker reported lower-than-expected second-quarter guidance.
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