The major U.S. index futures for the Dow Jones, S&P and Nasdaq are currently pointing to a lower open on Thursday, with stocks likely to give back ground after ending the previous session sharply higher.
Traders may look to cash in on yesterday’s gains amid lingering concerns about the economic outlook following the Federal Reserve’s monetary policy announcement on Wednesday.
The Fed announced its widely expected decision to leave interest rates unchanged, but forecasts suggest officials still expect to resume cutting rates later this year.
However, the Fed officials also lowered their projections for GDP growth in 2025 to 1.7 percent from 2.1 percent and raised their forecasts for consumer price growth this year to 2.7 percent from 2.5 percent.
Fed Chair Jerome Powell said during his post-meeting press conference that a “good part” of the higher inflation forecast is due to tariffs.
Following the sharp pullback seen in Tuesday’s session, stocks showed a strong move back to the upside during trading on Wednesday. With the rally, the major averages largely offset Tuesday’s steep losses.
The major averages pulled back off their best levels going into the close but remained sharply higher. The Nasdaq surged 246.67 points or 1.4 percent to 17,750.79, the S&P 500 jumped 60.63 points or 1.1 percent to 5,675.29 and the Dow climbed 383.32 points or 0.9 percent to 41,964.63.
Stocks showed a notable rebound early in the session and saw further upside following the Federal Reserve’s monetary policy announcement.
The Fed announced its widely expected decision to once again leave interest rates unchanged, but projections signaled the central bank is still likely to lower rates later this year.
The Fed said it decided to maintain the target range for the federal funds rate at 4.25 to 4.50 percent in support of its dual goals of maximum employment and inflation at the rate of 2 percent over the longer run.
At the Fed’s last meeting in late January, the central bank also left rates unchanged after it lowered rates by a total of 100 basis points or 1.0 percentage point over the three previous meetings.
The accompanying statement noted “uncertainty around the economic outlook has increased,” and the Fed said it is “attentive to the risks to both sides of its dual mandate.”
With regard to the outlook for rates, Fed officials still forecast rates in a range of 3.75 to 4.0 percent by the end of the year.
The forecast was unchanged from last December and suggests the Fed is likely to cut rates by a quarter point two times later this year.
The central bank also announced it has decided to slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion beginning in April.
“The Fed indirectly cut rates today by taking action to reduce the pace of runoff of its Treasury holdings,” said Jamie Cox, Managing Partner for Harris Financial Group. “The Fed has multiple things to consider in the balance of risks, and this move was one of the easiest choices.”
He added, “This paves the way for the Fed to eliminate runoff by summer, and, with any luck, inflation data will be in place where reducing the Federal Funds rate will be the obvious choice.”
Airline stocks showed a strong move back to the upside after seeing significant weakness on Tuesday, with the NYSE Arca Airline Index soaring by 2.6 percent.
Significant strength was also visible among brokerage stocks, as reflected by the 2.4 percent surge by the NYSE Arca Broker/Dealer Index.
Computer hardware, networking and banking stocks also saw considerable strength, moving higher along with most of the other major sectors.
Dow Jones, S&P, Nasdaq, Lingering Economic Worries May Lead To Pullback On Wall Street
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