U.S. Index Futures Rise as Fed’s Dovish Outlook Spurs Positive Investor Sentiment; Oil Prices See Minor Declines

U.S. index futures are showing an uptrend in Thursday’s pre-market, driven by the record close of the three major indexes in the previous session and the more “dovish” stance than anticipated by the Federal Reserve at the end of its latest monetary policy meeting.

At 6:48 AM, Dow Jones futures (DOWI:DJI) were up 90 points, or +0.23%. S&P 500 futures advanced 0.30%, and Nasdaq-100 futures gained 0.65%. The yield on 10-year Treasury notes was at 4.229%.

In the commodities market, West Texas Intermediate crude oil for May fell 0.18%, to $81.12 per barrel. Brent crude for May dropped 0.16%, near $85.81 per barrel. Iron ore traded on the Dalian exchange rose 2.72%, to $118.00 per metric ton.

On Thursday’s economic agenda, the spotlight initially turns to weekly jobless claims data at 8:30 AM, with LSEG consensus anticipating around 215,000 applications. Next, at 09:45 AM, investors’ eyes will be on the service and manufacturing PMI indexes. Finally, at 10:45 AM, it will be time for February’s existing home sales.

Asia-Pacific markets mostly closed higher on Thursday, buoyed by optimism after the Federal Reserve kept interest rates steady but signaled possible future cuts. Notably, Japan’s Nikkei reached a new record (+2.03%). South Korea’s Kospi (+2.41%) and Hong Kong’s Hang Seng (+1.93%) also saw significant gains. The exception was the Shanghai stock exchange, which closed slightly lower (-0.08%).

European markets are recording gains, reflecting investors’ reaction to the recent monetary guidance from the Bank of England, Norges Bank, and the Swiss National Bank. The latter surprised by cutting its interest rate by 0.25 percentage points to 1.5%, anticipating that inflation will remain under control. Expectations revolve around the Bank of England, expected to maintain the rate at 5.25%, with analysts keen on possible signs of future reductions.

On Wednesday, U.S. stocks initially fluctuated but gained momentum after the Federal Reserve kept rates steady and projected three rate cuts this year. The Dow Jones, S&P 500, and Nasdaq closed higher, driven by the Fed’s decision and the expectation of a favorable monetary policy, stimulating gains across various sectors, including airlines and banks. Specifically, the Dow saw an increase of 401.37 points, or 1.03%, ending the day at 39,512.13 points. The S&P 500 grew by 46.11 points, or 0.89%, closing at 5,224.62 points, while the Nasdaq Composite advanced 202.62 points, or 1.25%, to 16,369.41 points.

This market optimism was driven by the Fed’s decision to keep interest rates stable, aligning with market expectations, but also by maintaining its previous projections, which indicated the possibility of three interest rate reductions over the year. The federal funds rate remained in the range of 5.25% to 5.50%, unchanged since the quarter-point increase last July. Despite the need for greater confidence in the slowing inflation trend towards the 2% target before any rate cuts, the Fed’s projections still suggest a reduction in rates to the range of 4.50% to 4.75% by the end of 2024.

In the earnings front, scheduled to present financial reports before the market opens are Intuitive Machines (NASDAQ:LUNR), Accenture (NYSE:ACN), Sundial (NASDAQ:SNDL), Academy Sports & Outdoors (NASDAQ:ASO), Darden Restaurants (NYSE:DRI), FactSet (NYSE:FDS), BaoZun (NASDAQ:BZUN), Exscientia (NASDAQ:EXAI), Lufax (NYSE:LU), Mink Therapeutics (NASDAQ:INKT), among others.

After the close, the numbers from FedEx (NYSE:FDX), Nike (NYSE:NKE), Direct Digital Holdings (NASDAQ:DRCT), AAR Corp (NYSE:AIR), Vitru Education (NASDAQ:VTRU), Asensus Surgical (AMEX:ASXC), HireQuest (NASDAQ:HQI), HyperFine (NASDAQ:HYPR), Worthington Steel (NYSE:WS), and more will be awaited.