Stock futures fell slightly after the Federal Reserve raised rates by half a point and key averages rose towards the end of the day.
Futures pegged to the Dow Jones Industrial Average lost 46 points, or 0.1%. The S&P 500 and Nasdaq 100 futures fell 0.1%.
In regular trading, the Dow Jones Industrial Average rose 932 points, or 2.81%, and the S&P 500 rose 2.99% with the largest increase since 2020. The Nasdaq Composite jumped 3.19%.
Shares rose for the third day in a row to start the month, after the Fed was expected to raise the base rate by 50 basis points and said it would start reducing the balance in June. However, the mood of investors, which has been threatening since the beginning of the year, changed during Powell’s press conference, when he clarified that the Fed “does not actively consider” a larger rate increase of 75 basis points.
Some Wall Street strategists have suggested that after the rate hike, markets may see rally relief. Following Powell’s comments, investors seemed reassured about the central bank’s ability to slow inflation without causing a recession.
However, the Fed remains open to the prospect of raising rates above neutral to curb inflation, said Zachary Hill, head of portfolio strategy at Horizon Investments.
“Despite the tightening we’ve seen in the financial environment over the past few months, it’s clear that the Fed would like them to be tougher,” he said. “A higher stock valuation is incompatible with this desire, so if supply chains do not heal quickly or workers do not return to work, any stock rallies are likely to be borrowed in time as Fed reports become more hawkish again.”
Even after the stock rose before the end of the day, the market saw big downward movements after several hours as companies continued to report financial results for the last quarter. Etsy fell more than 12%, and eBay lost 5.8% in expanded trading, based on lower-than-expected earnings forecasts for the second quarter. At the same time, shares of Booking Holdings rose by more than 8% during non-business hours.
Revenues continue on Thursday, and Shell, Shopify and ConocoPhillips are due to report before the call. Block, DoorDash, Shake Shack, Zillow and other big names will be announced after the market closes.
In the economic data, investors will consider data on unemployment claims, which should appear at 8:30 am
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