US Stock Futures Fall as Fed’s Kashkari Tempers Rate Cut Optimism
Concerns over Federal Reserve’s Interest Rate Cuts
In evening trading on Wednesday, U.S. stock index futures experienced a decline, reversing the positive trend seen on Wall Street earlier in the day. Uncertainty loomed over the extent and timing of the Federal Reserve’s interest rate reductions.
Fed’s Stance on Rate Cuts
While Fed Chair Jerome Powell hinted at future interest rate cuts, he emphasized the need for more confidence in decreasing inflation rates. Minneapolis Fed President Neel Kashkari further added to this sentiment by suggesting that the Fed might only cut rates twice this year.
Market Reaction
Despite initial optimism following Powell’s comments, futures did not sustain the positive momentum and slid after Kashkari’s remarks. The and fell by 0.2% and 0.3%, respectively, while dropped by 0.1%.
Kashkari’s Rate Cut Prediction
In an interview, Kashkari expressed his belief that there might be one or two rate cuts in 2024, highlighting the resilience of the U.S. economy. This strength could influence U.S. inflation expectations and provide the Fed with room to maintain higher rates.
Impact on Economy and Assets
Steady rates can weigh on the economy, impact corporate earnings, and reduce the attractiveness of equities and other risk-driven assets. The upcoming data release is anticipated to offer insights into the U.S. economic landscape.
Wall Street’s Outlook
Despite recent fluctuations, Wall Street indexes are approaching record highs once again, with tech companies playing a significant role in driving market performance. The , , and indexes all showed positive gains.
Stock Movement Highlights
Victoria’s Secret & Co faced a 20% decline in aftermarket trading due to weaker-than-expected 2024 guidance. On the other hand, cybersecurity firm OneSpan Inc surged nearly 30% on better-than-expected quarterly earnings. New York Community Bancorp Inc also saw a 1.2% rise in aftermarket trading after raising over $1 billion in new capital.
