News

U.S. Stock Futures Signal Strong Start after Fed Rate Decision

1 2 3 4 5

4.3

Andrew R. Michaud

• July 31, 2023

Key Points

• Dow Jones Industrial Average futures (YM00, +0.14%) rose by 58 points, or 0.2%, reaching 35,742.
• S&P 500 futures (ES00, +0.53%) increased by 26 points, or 0.6%, reaching 4,621.
• Nasdaq 100 futures (NQ00, +1.11%) surged by 176 points, or 1.1%, reaching 15,787.

Previous Day's Performance

• Dow Jones Industrial Average (DJIA, +0.23%) rose by 82 points, or 0.23%, reaching 35,520.
• S&P 500 (SPX, -0.02%) declined by 1 point, or 0.02%, reaching 4,567.
• Nasdaq Composite (COMP, -0.12%) dropped by 17 points, or 0.12%, reaching 14,127.

Longest Winning Run Since 1987

The Dow experienced its longest winning streak since January 20, 1987, as it rose for the 13th consecutive session.

Driving Factors for the Market

The Federal Reserve raised interest rates by a quarter point to a range between 5.25% and 5.5%. Financial markets perceive this rate hike as potentially the final one in this cycle, although central bank officials have not ruled out other options yet.

Fed Funds Target Expected to Remain Steady Until 2024

Strategists at HSBC are predicting that the Federal Reserve's target for the federal funds rate will be kept at its current level until the second quarter of 2024. They further anticipate a reduction of 75 basis points next year.

According to the strategists, there were no hawkish additions or changes in the statement issued by the Fed. However, they perceived the change in language from "modest" to "moderate" growth, as well as Jerome Powell's press conference, to be slightly positive for risk assets. They also expect that the 2-year Treasury yields will trade within their recent range of 4.6% to 5%.

Additionally, Meta Platforms (formerly known as Facebook) experienced a boost in its shares. The company reported better-than-expected earnings and a stronger revenue outlook for the current quarter, leading to an 8% increase.

Looking ahead, there are several key reports and events. These include the release of US inflation data on Friday, as well as second-quarter GDP, weekly jobless claims, durable-goods orders, and the trade balance in goods. Moreover, there will be a rate decision from the European Central Bank in the near future.

Several notable companies are also preparing to release their results. Comcast, McDonald's, and Intel are among those due to report their earnings.