The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to extend the rebound seen in the previous session.
Optimism about the outlook for interest rates may continue to inspire traders to get back into the markets following the notable pullback seen to start the week.
Federal Reserve Chair Jerome Powell told members of Congress on Wednesday that the central bank is likely to begin cutting interest rates later this year.
While Powell also reiterated officials needs “greater confidence” inflation is slowing, traders remain optimistic the Fed will begin cutting rates in June.
The futures did not show much reaction to the latest batch of U.S. economic data, including a Labor Department report showing first-time claims for U.S. unemployment benefits came in unchanged from an upwardly revised level in the week ended March 2nd.
Following a notable pullback to start the week, stocks moved mostly higher during trading on Wednesday. The major averages all moved to the upside on the day but remain well off their recent record highs.
The major averages finished the day off their highs of the session but still in positive territory. The Nasdaq climbed 91.95 points or 0.6 percent to 16,031.54, the S&P 500 rose 26.1 points or 0.5 percent to 5,104.76 and the Dow edged up 75.86 points or 0.2 percent to 38,661.05.
The rebound on Wall Street partly reflected a positive reaction to Powell’s testimony before the House Financial Services Committee.
The Fed Chief described the economic outlook as “uncertain” and said progress towards the Fed’s 2 percent inflation objective is “not assured.”
“Reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require even tighter policy to get inflation back to 2 percent,” Powell said.
He added, “At the same time, reducing policy restraint too late or too little could unduly weaken economic activity and employment.”
Powell said future interest rate decisions would be based on careful assessment of the incoming data, the evolving outlook, and the balance of risks.
Meanwhile, a report released by payroll processor ADP showed private sector employment in the U.S. increased by slightly less than expected in the month of February.
ADP said private sector employment rose by 140,000 jobs in February after climbing by an upwardly revised 111,000 jobs in January.
Economists had expected private sector employment to grow by 150,000 jobs compared to the addition of 107,000 jobs originally reported for the previous month.
Semiconductor stocks turned in a strong performance on the day, with the Philadelphia Semiconductor Index surging by 2.4 percent to a record closing high.
Considerable strength was also visible among computer hardware stocks, as reflected by the 1.8 percent jump by the NYSE Arca Computer Hardware Index. The index also reached a record closing high.
Gold stocks also saw significant strength amid an increase by the price of the precious metal, resulting in a 1.8 percent gain by the NYSE Arca Gold Bugs Index. Airline and networking stocks also moved to the upside on the day, while banking stocks gave back ground after turning in a strong performance on Tuesday.