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U.S. stock futures rose on Thursday a day after the Dow Jones Industrial Average closed at a record as the Federal Reserve signaled it could begin easing interest rate policy in 2024.
Dow futures indicated an opening gain of 81 points, or 0.2%, while the S&P 500 gained 12 points, or 0.25%, and the Nasdaq rose 65 points, or 0.4%.
The Federal Reserve Open Market Committee on Wednesday kept its key policy rate between 5.25% and 5.5%, the highest in 22 years, a move that Wall Street had widely expected following the latest rate hike of a quarter point in July.
However, the Federal Reserve's new Summary of Economic Projections, better known as dot plots, now suggests that the federal funds rate will fall 75 basis points, or 0.75 percentage point, next year, a sharp reversal with regarding recent comments that had indicated a “higher rates for longer stance.”
“The FOMC statement reiterated that the Federal Reserve will 'proceed carefully' in setting monetary policy, meaning rates will likely remain unchanged in the near term,” said Bill Adams, chief economist at Comerica Bank.
“However,” he added. “Chairman Powell revealed in the post-meeting press conference that rate cuts were discussed at the meeting, which in the Kabuki conventions of US monetary policy indicates that a rate cut is increasingly likely in the next half anus”.
The 10-year U.S. Treasury yield fell below 4% for the first time since August on Thursday, as investors reacted to the Federal Reserve's guidance.
The economic calendar calls for reports of retail sales and weekly unemployment claims.
Adobe Stock (ADBE) – Get a free report fell after the cloud software company beat Wall Street estimates for the fourth quarter but offered disappointing guidance.
For its full 2024 fiscal year, Adobe forecast adjusted earnings of $17.80 per share, on sales of $21.4 billion. Analysts had expected earnings of $18 per share on sales of $21.73 billion.
Vivendi VIVHY rose after the Paris-based telecommunications and media company said it was examining a possible split into three businesses around Canal+, Havas and an investment firm.
On the political front, House Republicans voted Wednesday to formalize an impeachment inquiry into President Joe Biden.
Hunter Biden, the president's son, defied a subpoena by Republican investigators to testify behind closed doors and reiterated his willingness to testify publicly. Republicans said they would pursue contempt proceedings against him for not agreeing to appear for the deposition.
