S&P 500, Nasdaq Futures Rise, Pointing To Catch-Up Rally - Strategist Warns Fed Rate Cut Won't Spark Fireworks

Futures tied to the S & P 500 and Nasdaq 100 indices rose late Wednesday, signaling that these averages could make good the losses experienced after the Federal Reserve's rate decision. The Jerome Powell-led Fed cut rates by a quarter-point, aligning the expectations, but the major averages, excluding the Dow Jones Industrial Average, lost ground, potentially in a“sell-the-news” move.

As the market looks past the Fed decision, the Nasdaq 100 futures rose over 0.62% as of 11 p.m. ET on Wednesday. The S & P 500 and the Dow futures added 0.43% and 0.29%, respectively, and the Russell 2000 futures climbed 0.54%.

The markets closed on a mixed note on Thursday as traders took stock of the Fed decision, the updated forecasts, and the dot plot, along with Powell's comments at the post-meeting press conference. Typical of a Fed decision day, the averages treaded water before the verdict was announced but spiked higher on the announcement. As investors digested the rest of the news flow surrounding the rate decision, the optimism gave way to skepticism.

Economists and market watchers called out the Federal Open Market Committee (FOMC) meeting for being a “mess,” as they took exception to the wide spread of the dot plot, which reflects the expectations of the 19 policymakers.

Macro strategist Jim Bianco viewed this as undermining the Fed's credibility. The“Risk Management” cut Powell referred to is seen more as a political reason than a necessity, he added. Allianz advisor and economist Mohamed El-Erian said he concurred with the general perception that the Fed is confused and divided about the long-term outlook.

The major indices gave back their gains and ended on a mixed note, with the Dow and the Russell 2000 managing to close in the green.

The SPDR S & P 500 ETF (SPY), an exchange-traded fund (ETF) that tracks the S & P 500 Index, and the Invesco QQQ Trust (QQQ) fell 0.12% and 0.20%, respectively. On the other hand, the SPDR Dow Jones Industrial Average ETF Trust (DIA) and the Shares Russell 2000 ETF (IWM) slipped 0.54% and 0.26%, respectively.

The weekly jobless claims report, the results of the Philadelphia Fed's September manufacturing survey, and the Conference Board's leading economic indicators index for August could set the tone for trading in Thursday's session.

Darden Restaurants (DRI), FactSet (FDS), FedEx (FDX), and Lennar (LEN) are among the companies scheduled to report quarterly results on Thursday.

Comerica Wealth Management's Chief Investment Officer, Eric Teal, said he expects the yield curve to steepen due to expectations that further stimulus will be forthcoming. The strategist views this as boding well for value-oriented sectors and smaller companies as the market broadens.

Bolvin Wealth Management Group President Gina Bolvin said the Fed decision wasn't a pivot, but a measured step.

“For investors, this means modest rate relief, not fireworks,” she said, adding that rate-sensitive sectors like housing and consumer discretionary may benefit.“The Fed is walking a fine line, and upcoming inflation and jobs data will determine what comes next,” she added.

Crude oil prices retreated late Wednesday, adding to their regular session's losses, and gold futures also pulled back. The 10-year U.S. Treasury note yield, which rose after the Fed decision to 4.076%, has seen a modest retreat in the overnight session.

In the currency market, the U.S. dollar rose slightly against most major currencies, except the euro.

Major Asian markets were mixed Thursday morning following an uninspiring lead from Wall Street. The Nikkei 225 average rose sharply, hitting an intraday high, riding on the yen's weakness, as traders looked ahead to the outcome of the Bank of Japan's 2-day monetary policy meeting that kicks off on Thursday. The central bank is widely expected to keep the uncollateralized overnight call rate unchanged at 0.50%.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

MENAFN18092025007385015968ID1110077595