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US pre-open: Stocks to extend losses after FOMC meeting

By Benjamin Chiou

Date: Thursday 21 Sep 2023

US pre-open: Stocks to extend losses after FOMC meeting

(Sharecast News) - US stock futures were pointing to further losses on Wall Street on Thursday after hawkish comments from the Federal Reserve spooked investors the previous session.
Despite leaving interest rates unchanged at the 5.25-5.5% range on Wednesday - as widely expected - the majority of Federal Open Market Committee indicated that there would likely be a need to tighten monetary policy again this year at one of its remaining two meetings. Stocks dropped on the news, with all three benchmark indices in the US slipping into red.

In pre-market trade on Thursday, futures were pointing to falls of -0.4% on the S&P 500, -0.2% on the Dow and -0.6% on the Nasdaq.

The Fed's comments sparked a big rise in bond yields, with the yield on a 10-year US Treasury briefly touching 4.45% for the first time in 16 years. Ahead of the opening bell in New York, 10-year yields were up 2.4 basis points at 4.438%.

The FOMC committee indicated that interest rates would only be lowered to around 5% by the end of 2024, suggesting that they remain committed to a 'higher-for-longer' strategy.

Meanwhile, at a press conference following the meeting, chair Jerome Powell said he still needed to see "convincing evidence" that higher interest rates are having the desired effect on inflation before the FOMC can begin to loosen monetary policy.

Nevertheless, Neil Wilson from Markets.com said: "The Fed is not convinced it's done but it probably is. This is about optionality rather than desire. Rates are already plenty restrictive. and it would require a change in the outlook for inflation's stickiness before November to push into another hike."

On the agenda during Thursday's session is the weekly print of initial jobless claims, due at 0830 ET, which was expected to have risen to 225,000 in the week to 15 September, up from 220,000 previously. Also on tap is the Philadelphia Fed Manufacturing Survey for September and existing home sales figures for August.


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