U.S. stock futures soared on Thursday, reflecting investor optimism after the Federal Reserve’s surprise decision to reduce interest rates by half a percentage point on Wednesday. The Dow Jones Industrial Average futures rose by 468 points, or 1.1%, while futures tied to the S&P 500 increased by 1.5%, and Nasdaq 100 futures climbed 2%.
Shares of major tech companies, including Nvidia and AMD, each saw gains of over 3%, and Micron Technology also traded more than 2% higher. Regional bank stocks benefited from the Fed’s move, with the SPDR S&P Regional Banking ETF (KRE) rising nearly 3%, driven largely by New York Community Bancorp’s 3% increase.
The Fed’s decision to lower the overnight lending rate to a range of 4.75% to 5% marked the first rate reduction in four years, surprising some investors who were concerned about the scale of the cut. Initially, the market reacted positively to the announcement, but a subsequent dip occurred as traders processed Federal Reserve Chair Jerome Powell’s remarks suggesting that further significant cuts should not be anticipated.
Tom Porcelli, chief U.S. economist at PGIM Fixed Income, explained that the market’s initial excitement was tempered by Powell’s clarification that the 50-basis-point cut does not imply a commitment to more aggressive reductions in the future.
As U.S. markets reacted, European markets also opened higher, reflecting investor sentiment as they await the Bank of England’s rate decision later today.
I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.