Stock futures stable after Dow Jones, S&P breaks 4-day losing streak following Fed move

U.S. stock index futures were little changed overnight Wednesday after the Federal Reserve kept benchmark interest rates unchanged, while indicating no immediate intention to remove stimulus policies.

Futures contracts linked to the Dow Jones Industrial Average gained 35 points. S&P 500 futures were up 0.1%, while Nasdaq 100 futures were up 0.14%.

Shares ended higher overall during regular trading following the central bank’s comment. The Dow Jones gained around 340 points, or 1%, for its first positive session in five and best day since July 20. The 30-stock benchmark, however, closed below its highest levels of the day, after advancing more than 500 points to one point.

The S&P rose 0.95%, also breaking a four-day losing streak and posting its best day since July 23. The Nasdaq Composite ended the session up 1.02%, while the Russell 2000 outperformed the session, up 1.48%.

“If progress continues overall as planned, the Committee considers that a moderation in the pace of asset purchases could soon be justified,” said a statement from the Fed at the end of the meeting. However, no timeline has been given.

The central bank implemented a $ 120 billion-per-month bond buying program last year as the pandemic shut down the economy. As economic conditions improve, more members of the Federal Open Market Committee are now seeing the first rate hike occur in 2022.

“The Fed has adopted a positive tone, acknowledging that the economy is strong enough to stand on its own feet and that the central bank can begin to remove the monetary stimulus it has provided since the start of the Covid crisis.” said Chris Zaccarelli. , Director of Investments for Independent Advisor Alliance.

“While there may be further turmoil this fall, we are constructive about the US economy in general and believe any downturn would be worth buying as the fundamentals are still strong and the recession appears to be over. ‘a year at this point,’ he added.

Wednesday’s decision was not enough to push stocks into the green for the week, however. The Nasdaq Composite is down 0.98% over the past three sessions, while the S&P and Dow are down 0.84% ​​and 0.94% respectively.

Part of the weakness this week is due to concerns over heavily indebted Chinese real estate developer Evergrande. The company said on Wednesday that its real estate group would pay the interest on time, which allayed some fears.

September also lives up to its reputation as a rough patch for stocks, with the top three averages all down 2% or more for the month.

“We believe the S&P 500 still has room, but one of the biggest downside risks comes from valuations against the backdrop of the prospect of higher yields / ERP, less liquidity and more growth. slow, “UBS said in a recent note to clients.

The Labor Department will release the initial number of jobless claims on Thursday, while several companies are on the bridge for quarterly updates, including Darden Restaurants, which reports ahead of the market opening, while Nike and Costco Wholesale will provide quarterly updates once the market closes. Flash estimates for September’s Manufacturing PMIs and Services PMIs will also be released.