S&P 500 Futures Show Strength Following Fed’s New Rate Stance

U.S. stock index futures showed mainly positive movements on Friday, which was a change from their previous trend following the Federal Reserve’s recent announcement about a higher interest-rate forecast for the next year, made on Wednesday.

What’s happening

• The value of YM00, which represents the futures for the Dow Jones Industrial Average, decreased by 7 points (equivalent to 0.14%), bringing it to a total of 34330.
• The S&P 500 futures, referred to as ES00, rose by 5 points or 0.1% and reached a level of 4377.
• The Nasdaq 100 futures, with the ticker symbol NQ00, experienced a growth of 0.64% as it rose by 46 points, which is equivalent to a 0.3% rise, ultimately reaching a cumulative value of 14908.

In English, the paragraph can be paraphrased as follows: Last Thursday, the Dow Jones Industrial Average decreased by 370 points, representing a decline of 1.08% and reaching a value of 34070. Likewise, the S&P 500 went down by 72 points, equivalent to a 1.64% decline, and settled at 4330. The Nasdaq Composite also experienced a drop of 245 points, resulting in a 1.82% decrease, and ended with a final value of 13224.

The S&P 500 has experienced a decline of 2.8% in the past three days.

What’s driving markets

Stocks seemed to find stability on Friday after two consecutive days of decline sparked by the Federal Reserve’s announcement. The Fed chose to keep its policy interest rates unchanged, however, it raised its projected rates for 2024 by 0.5%.

On Thursday, new data revealed a surprising decline in the number of individuals seeking unemployment benefits, which suggests a strong employment market. As a result, the 2-year Treasury yield attained its highest point since 2006, while the 10-year yield reached its highest level since 2007.

Saxo Bank analysts mentioned that the impact of the recent statement by the U.S. Federal Reserve, indicating a prolonged period of high interest rates, is still ongoing. As a result, Wall Street witnessed its biggest drop in half a year, with the yield on the 10-year government bonds hitting 4.5% for the first time since 2007. Moreover, the chances of future interest rate cuts have decreased to only 75 basis points.

Reports suggest that both the S&P 500 and the Nasdaq 100 closed at levels of technical support, potentially resulting in a minor rebound despite the prevailing bearish trend.

After a busy week of central bank decisions, the Bank of Japan decided to keep its loose monetary policy stance the same. This caused the dollar to become stronger compared to the yen, with the USDJPY exchange rate increasing by 0.41%.

The initial purchasing managers index reports for the manufacturing and service sectors will be included in the economic calendar of the United States on Friday. S&P Global will be providing these reports. Furthermore, Fed Gov. Lisa Cook will give a speech at a conference centered around artificial intelligence.

Companies in focus

• Global gaming company Activision Blizzard Inc. saw its premarket trading rise by almost 2% after receiving positive news from the U.K. Competition and Markets Authority. The authority disclosed that Microsoft Corp.’s updated proposals for acquiring Activision have paved the way for the $75 billion deal to be approved. As part of these new terms, Activision would transfer its cloud-gaming rights to Ubisoft Entertainment SA, a French videogame publisher. This development caused Ubisoft’s shares in Paris to increase by 3.5%.
• Chinese stocks experienced a surge in value, with Alibaba Group Holding Limited increasing by 3.8%, NIO Inc. rising by 3.6%, and JD.com Inc. shares gaining 3.2%. Following two days of decline, the Hang Seng Index in Hong Kong concluded on Friday with a notable 2.2% rise, allowing it to recover from its lowest point in a month. Additionally, Friday brought news that China is considering loosening rules regarding foreign ownership of publicly traded companies.