Stock futures fell Thursday, building on the losses from the previous session, after the Federal Reserve delivered another interest rate hike and signaled that no pivot or rate cut is coming anytime soon.
Futures tied to the Dow Jones Industrial Average traded 143 points lower, or 0.4%. S&P 500 futures and Nasdaq 100 futures dipped 0.6% and 0.7%, respectivley.
A spike in yields put pressure on futures. The benchmark 10-year Treasury yield popped 14 basis points to 4.199%. The 2-year rate traded 16 basis points higher at 4.73%.
Traders had anticipated the central bank’s 0.75 percentage point rate increase and initially read the Fed’s statement as dovish, sending stocks higher on Wednesday after the decision was delivered. Those gains then reversed when Fed Chair Jerome Powell said it was “premature” to talk about a rate hike pause and that the terminal rate would likely be higher than previously stated.
“We still have some ways to go and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected,” he said.
The Dow Jones Industrial Average ended Wednesday’s trading session 505 points lower, or 1.6%. The S&P 500 dropped 2.5%, and the Nasdaq Composite was off by 3.4%.
Markets will likely continue to seesaw until it is clear inflation has cooled off and that the Fed has stopped marching rates higher. Any data that shows the U.S. economy isn’t slowing as the central bank tightens policy will likely weigh on stocks.
The next important report is October nonfarm payrolls, set to be released Friday.
“You get a good jobs number, in other words a good unemployment rate that doesn’t go higher, then the market is in a lot of trouble,” said Guy Adami, director of advisor advocacy at Private Advisor Group, said on CNBC’s “Fast Money.”
Meanwhile, the corporate earnings season continued, with Qualcomm, Roku and Fortinet all falling sharply after reporting disappointing quarterly results and forward guidance.
Correction: A previous version misstated the declines in Wednesday’s session.
