U.S. equity futures fell early on Thursday as investors digested another 75 basis point interest rate hike by the Federal Reserve, as well as quarterly results from a few major companies.
Futures on the Dow Jones Industrial Average (DJIA) lost0.17%, while those on the S&P 500 (SPX) moved 0.25% lower, as of 7.55 a.m. EST, Thursday. Meanwhile, the Nasdaq 100 (NDX) futures retracted by 0.62%.
The pre-market trading session saw a 5.9% drop in the shares of Meta Platforms (META) on dismal quarterly results. Moreover, shares of healthcare company Teladoc (TDOC) plunged more than 26% in early morning trading on news of a $3 billion goodwill impairment charge. However, Ford’s (F) top and bottom line beats and dividend hike garnered 5% gains for the stock.
The Fed’s Updates Buoys Confidence
However, the main highlight of Wednesday was the Fed’s monetary policy decision, which was to pull its benchmark interest rate to a range of 2.25%-2.50%. Fed Chair Jerome Powell was encouraged by how the job market has held up amid the increasing inflation and demand slowdown.
The central bank has also managed to shrink its balance sheet by $16 billion since June. Powell also mentioned that the aggressiveness of the September meeting will depend on the economic data and progress.
Interestingly, investors took the update to their stride, with the S&P 500, the Dow, and the Nasdaq 100 rising 2.62%, 1.37%, and 4.26%, respectively, at the end of the regular trading session Wednesday. This surge comes as a surprise as investors had been deeply concerned about the aggressive hikes pushing the economy into a recession.
However, Powell’s optimistic commentary on the economy buoyed market confidence. The Chairman assured that he doesn’t believe the economy to be in a recession, as there are many economic aspects that are performing well, which is not typical for an economy in a recession. Further, he said that he believes that a temporary speedbreaker to economic growth is essential to “create some slack.”