U.S. stock futures were flat after the Federal Reserve skipped a rate hike at its meeting that ended Wednesday, but signaled two more rate hikes may still be in store later this year.
Dow Jones Industrial Average futures rose by 10 points, or 0.03%. S&P 500 and Nasdaq-100 futures climbed 0.14% and 0.18%, respectively.
Earlier in the day, the broad market index and the Nasdaq Composite both reached their highest levels since April 2022. The S&P 500 closed the day 0.08% higher. The index notched its fifth consecutive positive session and its longest winning streak since November 2021. The Nasdaq rose 0.39%, while the Dow Jones Industrial Average fell 0.68%.
Fed Chair Jerome Powell said during a post-meeting press conference that the Federal Open Market Committee would use the six weeks until its next meeting to “take into account the cumulative tightening of monetary policy.” He added that a decision on July’s policy move has not yet been made.
“The Fed shocked markets today – not by raising rates (because they kept them constant as expected), but because they indicated much more hawkishness than expected in their language and in their forward economic projections,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. He added that the initial market shock was quickly shaken off, with the major averages cutting earlier losses before the end of Powell’s press conference.
“While this policy decision indicates that the Fed has transitioned from the escalation stage of the rate cycle to the calibration stage, there is little question that the Fed is fully prepared to raise rates further in the future if needed,” said Marty Green, principal at Polunsky Beitel Green.
“But we should expect their moves from here to be more intermittent and in smaller quarter-point increments based on data indicating a more restrictive rate stance is warranted,” Green added.
Additional economic data releases Thursday morning will give investors and policymakers better insight on the strength of the labor market and consumer spending. Weekly jobless claims numbers and retail sales for May are set to be released tomorrow morning. Investors will also keep an eye on the Philadelphia Fed’s June manufacturing survey, as well as the Fed’s May industrial production and capacity utilization numbers.
Wall Street will be looking at a handful of corporate earnings. Kroger, Jabil and John Wiley are scheduled to announce earnings Thursday morning, with Adobe reporting after the close.
