Nasdaq futures indicated a positive start on Thursday, following the Federal Reserve’s decision to increase interest rates for the first time in three years, while the 10-year Treasury yield retreated below 5%. Futures for the Nasdaq 100, S&P 500, and Dow Jones Industrial Average indicated increases of 1%, 0.8%, and 0.7%, respectively, in the latest trading session. Yesterday, the three major U.S. stock indexes experienced a decline, marking the seventh decrease in eight sessions, as the Dow industrials fell by over 600 points. This movement followed the Federal Reserve’s unanimous decision to increase interest rates by a quarter-percentage point, with Chair Kevin Warsh stating that inflation has been “too high … for too long.”
The 10-year Treasury yield, a critical benchmark for various interest rates such as mortgages, corporate bonds, and other loans, recently traded at approximately 4.97%, reflecting a decline of five basis points from Wednesday’s close. According to the CME FedWatch tool, traders are estimating a 55% probability that the Federal Reserve will increase interest rates by a quarter-percentage point above the new range of 3.75% to 4% during the late-October meeting. Furthermore, there is an 87% probability of a rate hike of at least one quarter-percentage point at the December meeting, which follows the U.S. midterm elections.
Oil prices experienced a further decline on Thursday, driven by optimism regarding the temporary nature of supply disruptions stemming from a closed pipeline in Saudi Arabia. U.S. benchmark West Texas Intermediate prices experienced a decline of 1.8%, settling at $100.55 a barrel in recent trading. Meanwhile, Brent crude futures, recognised as the international benchmark, saw a decrease of 2.6%, approaching $103. In corporate news, shares of Generac Holdings soared 28% in premarket trading following a deal worth up to $8 billion to sell backup power generators to Amazon for data centers.
Shares of Amazon advanced 1.5%, and all of its fellow Magnificent Seven counterparts also exhibited upward movement; the Roundhill Magnificent Seven ETF recorded an increase of 1%. The Roundhill Memory ETF and the broader iShares Semiconductor ETF indicated an increase of approximately 2% each prior to the market opening. Bitcoin was trading around 76,300, slightly higher over the past 24 hours. The U.S. dollar index, which monitors the value of the greenback relative to a selection of foreign currencies, remained unchanged at 100.25. Gold futures declined by 0.4%, settling at $4,370 per ounce.
