US pre-open: Futures trade higher following Fed rate hike
By Iain Gilbert
Date: Thursday 23 Mar 2023
(Sharecast News) - Wall Street futures were in the green ahead of the bell on Thursday as market participants continue to digest the central bank's latest interest rate decision.
As of 1225 GMT, Dow Jones futures were up 0.13%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.45% and 0.87% firmer, respectively.
The Dow closed 530.49 points lower on Wednesday following the announcement of a 25-basis point interest rate hike from the Federal Reserve.
Both the FOMC's move and comments from chairman Jerome Powell following the two-day meeting were still in focus early on Thursday, with the central bank hiking rates 0.25%, as predicted by economists. However, the Federal Reserve also seemed to indicate that its inflation-fighting tightening campaign may very well be drawing to a close as it stripped out any mention of "ongoing increases" from its statement.
Also in focus, the head of the Department of the Treasury said that her agency had not looked at expanding the country's deposit insurance programme, although in individual cases that was a possibility if needed.
In testimony to the Senate, Janet Yellen said that the Treasury had not looked at expanding the Federal Deposit Insurance Corporation's deposit insurance programme. During a contagious bank run, the Treasury will likely seek an exception that would allow such a move, but that would come on a case-by-case basis, she reportedly added.
Zaye Capital's Naeem Aslam said: "From this point forward, what is going to be important is how the market is going to form its ultimate impression of the Fed decision, as well as whether or not politicians give more assistance for the banks in order to alleviate the lingering worries. We feel that the Federal Reserve made a decision that was quite dovish, and this is particularly true when we compare their decision to Jerome Powell's comments a few weeks ago regarding the compelling need for higher prices of interest rate rises.
"Since it seems that the Federal Reserve's next action is going to be a halt in the process of increasing interest rates, we think that investors should be less worried about the Fed's monetary policy. This is because it appears that the Fed's next move is going to be a pause. This may happen as soon as their next meeting, and taking a look at the Fed's fund rate and Fed's terminal rate, the chances have begun to build up for this scenario. This could happen as soon as their next meeting."
On the macro front, building permits rose by 1.55m in February, according to the Census Bureau, up from 1.34m a month earlier.
Still to come, the Chicago Fed's national activity index will be out at 1230 GMT, as will weekly jobless claims data, while February new home sales numbers were scheduled for release at 1400 GMT.
In the corporate space, General Mills and Darden Restaurants will both report earnings on Thursday.
Reporting by Iain Gilbert at Sharecast.com
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