U.S. stock index futures edged higher on Thursday as investors digested the Federal Reserve's projections of fewer-than-expected interest rate cuts and higher inflation next year that pummeled Wall Street a day earlier.
Market Snapshot
At 7:50 a.m. ET, Dow e-minis were up 265 points, or 0.62%, S&P 500 E-minis were up 44.25 points, or 0.74%, and Nasdaq 100 E-minis were up 150.5 points, or 0.7%.
Pre-Market Movers
Tesla - Tesla was rising 3.3% after the stock tumbled 8% on Wednesday following the Fed’s projections of fewer rate cuts next year. Even with the decline, the stock remains up 75% since Election Day on Nov. 5, andup 77% for the year.
Nvidia - Nvidia shares rallied 2.8% in premarket trading Thursday after a 5-day losing streak. Nvidia stock once jumped as much as 4.8% Wednesday as Wall Street analysts reiterated their Buy ratings on the stock despite concerns about rising competition and the possibility that AI chip demand could wane. But shares reversed direction Wednesday afternoon, ending the day down roughly 1%, as stocks fell across the board following commentary from the Federal Reserve projecting fewer rate cuts and stickier inflation in 2025.
Other AI stocks also rallied in premarket trading. Palantir rose 2.7%; BigBear.ai rose 6.7%; SoundHound AI rose 8.3%.
Micron, Western Digital - Micron Technology reported fiscal first-quarter adjusted earningsthat beat analysts’ estimates but a weak outlook for the company’s current second quarter sent the stock down 12%. The largest U.S. maker of memory chips said it expects fiscal second-quarter adjusted earnings of between $1.33 and $1.53 a share on revenue between $7.7 billion and $8.1 billion. Analysts had been expecting adjusted earnings of $1.91 a share on revenue of $8.94 billion. “While consumer-oriented markets are weaker in the near term, we anticipate a return to growth in the second half of our fiscal year,” said Chief Executive Sanjay Mehrotra. Fellow chip maker Western Digital fell 5%.
Nukkleus - Nukkleus shares surged another 30% in premarket trading. The little-known fintech company's stock soared about 3,554% in two days after it said it bought a stake in a defense firm.
Lennar - Shares of Lennar were falling 9.2% after the home builder postedfiscal fourth-quarter earnings and revenuethat fell from a year earlier, with c0-CEO Stuart Miller citing higher mortgage rates. “Even while demand remained strong, and the chronic supply shortage continued to drive the market, our results were driven by affordability limitations from higher interest rates,” Miller said. Deliveries in the period declined 7% to 22,206 homes, and new orders fell 3% to 16,895 homes.
Accenture - IT service provider Accenture beat Wall Street estimates for first-quarter revenue on Thursday, on the back of growing demand for its services to help clients adopt AI-powered tools. Shares of the company rose 6.9% in premarket trading.
Market News
Fed Lowers Rates by Quarter Point, Signals Two Cuts for 2025
Federal Reserve officials lowered their benchmark interest rate for a third consecutive time, but reined in the number of cuts they expect in 2025, signaling greater caution over how quickly they can continue reducing borrowing costs.
The Federal Open Market Committee voted 11-1 on Wednesday to cut the federal funds rate to a range of 4.25%-4.5%. Cleveland Fed President Beth Hammack voted against the action, preferring to hold rates steady.
New quarterly forecasts showed several officials penciled in fewer rate cuts for next year than they estimated just a few months ago. They now see their benchmark rate reaching a range of 3.75% to 4% by the end of 2025, implying two quarter-percentage-point cuts, according to the median estimate.
Only five officials indicated a preference for more reductions next year.
Powell Signals Fed’s Focus Has Returned Firmly to Inflation
Federal Reserve officials capped 2024 with a third-straight interest-rate cut and a strong signal that inflation concerns are back in the fore.
Chair Jerome Powell put it plainly: The central bank’s year-end inflation projection has “kind of fallen apart.”
Officials now see it taking much longer for inflation to reach their 2% target, which they have missed for nearly four years. As a result, they dialed back expectations for rate cuts next year, and Powell made clear that any adjustments will hinge on further progress in cooling price increases.
Bitcoin Tests $100,000 After Fed Spurs Worst Drop Since September
Bitcoin briefly sank below $100,000 as the Federal Reserve’s cautious outlook for interest-rate cuts hurt speculative investments.
The largest digital asset hit $98,760 at one point on Thursday — about $10,000 shy of the record high set earlier this week — before retaking the six-figure level. Tokens such as Ether and meme-crowd favorite Dogecoin also struggled.
Fed officials lowered borrowing costs for a third straight time, but reined in the number of reductions they expect in 2025. Chair Jerome Powell said more progress is needed on inflation before further loosening monetary policy.
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