By Pradeep Saran, September 21,2023
Stock futures declined on Thursday as concerns arose regarding the possibility of another Federal Reserve interest rate hike before the end of the year.
Futures linked to the Dow Jones Industrial Average were down by 93 points, equating to a 0.3% decrease. S&P 500 futures experienced a 0.4% drop, while Nasdaq 100 futures slid by 0.6%.
Despite surpassing Wall Street’s expectations in terms of revenue and profit, homebuilder KB Home witnessed a 2% decline in its stock. Marketing automation company Klaviyo, which recently made its debut on the public market, saw a nearly 2% decrease in premarket trading on Thursday.
In contrast, FedEx stood out with a 5% increase following the release of its fiscal first-quarter earnings report, which revealed adjusted earnings of $4.55 per share, surpassing analysts’ expectations of $3.73 per share, according to LSEG.
These developments come on the heels of a challenging Wednesday trading session. The three major stock indices closed at their lowest points of the day after the Federal Reserve announced that it would maintain the current interest rates but anticipated the possibility of a rate hike before the year’s end. Federal Reserve Chair Jerome Powell mentioned that while a soft economic landing remained feasible, it was not his primary scenario.
Jimmy Chang, Chief Investment Officer at Rockefeller Global Family Office, commented on the surprising optimism about the economic outlook expressed by the Federal Reserve. Notably, there was an upward revision in GDP growth projections for 2023. Chang emphasized the significance of the 10-year Treasury yield as a key economic indicator, which could exert pressure on the banking system. During Wednesday’s trading session, the 10-year note reached levels not observed since November 2007, and on Thursday, it hit a fresh multiyear high.
Additional economic data awaited traders on Thursday, including weekly jobless claims scheduled for release before the market’s opening, as well as existing home sales data later in the morning.