Futures were muted following a Fed-driven selloff on Thursday. Investors evaluated the effects of the Federal Reserve’s unshakable commitment to controlling inflation through accelerated interest rate increases on the country’s economic growth.
Futures for the Dow Jones Industrial Average went up 110 points, or 0.36%. Nasdaq 100 futures rose 0.1%, while S&P 500 futures increased by 0.27%.
The U.S. central bank increased interest rates by the anticipated 75 basis points and indicated that the policy rate will climb by 4.4% by year’s end and reach a maximum of 4.6% by the end of 2023, a steeper and longer trajectory than markets had anticipated.
Investors worry that the aggressive course could increase stock and bond volatility in a year that has already seen bear markets in both asset classes and could potentially lead to an economic catastrophe.
Following the Fed’s hawkish stance, a number of investment banks, including Goldman Sachs, Barclays, and Societe Generale, increased their forecasts for U.S. policy rates. These economists also predicted a slight recession in early 2024.
There are many risks at this point, but the Fed has made the decision to follow Volcker’s lead and continue on its current track while attempting to nip the problem in the bud, according to Eric Schiffer, the chief executive of the PE company Patriarch Organization in California.
I anticipate a market retest, a decline below June’s lows, and a value that better reflects the current situation.
The benchmark S&P 500 is just 4% away from its year-low, which occurred in mid-June. Concerns have been raised about the state of corporate America following a recent string of gloomy outlooks from businesses like FedEx Corp. and Ford Motor Co.
Concerns about a recession in the next one to two years increased as a result of a further inversion of the U.S. bond yield curve.
At 7:02 a.m. ET, the S&P 500 e-minis had increased 1.5 points, or 0.04%, the Dow e-minis had increased 35 points, or 0.12%, and the Nasdaq 100 e-minis had decreased 4 points, or 0.03%.
