S&P futures rose early Thursday after a market sell-off triggered by the first Federal Reserve interest rate hike in three years. Futures associated with the Dow Jones Industrial Average increased by 374 points, representing a rise of 0.7%. S&P 500 futures exhibited an increase of 0.8%, while Nasdaq-100 futures recorded a gain of 1%. In regular trading, the blue-chip index experienced a decline of over 630 points, equivalent to 1.2%, primarily influenced by the performance of financial services companies. The broad market experienced a decline, with the S&P 500 slipping by 0.5%, while the tech-heavy Nasdaq Composite concluded the session with a slight decrease.
In a widely anticipated decision, the Fed increased the overnight federal funds rate by a quarter percentage point on Wednesday afternoon, adjusting the target range to 3.75%-4%. Policymakers have indicated that an additional rate hike may be on the horizon this year, as Fed Chairman Kevin Warsh noted that inflation continues to be excessively elevated. Indeed, August’s latest consumer price index reading registered at 3.4%, while oil prices have exceeded $100 per barrel, although they experienced a decline on Thursday morning.
Mark Haefele stated in a note on Thursday morning that his team is “positioned for further equity gains while preparing for near-term volatility.” And “If tightening remains measured, credit spreads remain stable, and profits continue to grow, the rally should have scope to broaden across sectors and regions,” he said. “We recommend diversified equity exposure while avoiding excessive concentration in areas that are particularly sensitive to interest rates or rely on a single return driver.” Investors are currently focusing on Thursday’s economic data for additional insights into the economy’s health.
Weekly jobless claims data is scheduled for release at 8:30 a.m. Traders are closely observing the housing starts data for August, as it may provide insights into the impact of high borrowing costs on residential construction activity. In Asia, Japan’s Nikkei 225 concluded with a gain of 0.33%, whereas South Korea’s Kospi remained unchanged. Mainland China’s CSI 300 finished the day down by 0.45%. Australia’s benchmark index experienced an increase of 0.41%. European shares experienced an uptick in early trading on Thursday, as the Stoxx 600 rose by 0.5%, with the majority of sectors showing positive performance. London’s FTSE 100 and Germany’s DAX index both recorded increases of 0.5%.
