U.S. stocks are expected to open higher, recovering from the previous day’s steep sell-off. Investors are still digesting the Federal Reserve’s latest policy update, and are awaiting the release of weekly unemployment data.
The Dow Futures contract was up 40 points or 0.1%, while the S&P 500 Futures traded 17 points or 0.4% higher and the Nasdaq 100 Futures climbed 125 points or 1%.
The main stock averages closed sharply lower on Wednesday after the Federal Reserve raised interest rates by a quarter point. The Dow Jones Industrial Average fell over 500 points.
While this increase in interest rates was expected by many, Chair Jerome Powell also reaffirmed the central bank’s dedication to keeping inflation in check. He hinted that the policymakers had discussed pausing future interest rate increases in light of recent turmoil in the financial sector.
Treasury Secretary Janet Yellen said that the U.S. authorities were not considering “blanket insurance” for banking deposits across the sector, which did not boost sentiment.
Investors are looking for opportunities to buy stocks at lower prices Thursday, but there is concern that the Federal Reserve’s interest rate increases to fight inflation, combined with the problems in the banking sector, could cause the economy to enter a recession.
The release of new home sales data is scheduled for later Thursday, but more attention will be given to the initial jobless claims for the week, which will be released at 08:30 ET (12:30 GMT), in order to gain insight about the strength of the labor market.
Analysts expect the number of people filing for unemployment benefits to be slightly higher than the previous week.
The banking sector will remain in the spotlight in corporate news, with First Republic Bank (NYSE:FRC), PacWest Bancorp (NASDAQ:PACW), and Western Alliance (NYSE:WAL) all trading higher premarket after the recent selloff.
Coinbase’s stock prices fell sharply after the U.S. Securities and Exchange Commission threatened to take legal action against the company over some of its products.
Darden Restaurants and General Mills are scheduled to release their earnings reports.
Oil prices fell on Thursday after the Federal Reserve hiked interest rates. This caused crude oil stocks to rise for the 12th week in a row.
The Energy Information Administration’s data showed that U.S. crude oil inventories grew by more than 1 million barrels, reaching the highest level since May 2021.
At 07:00 ET, U.S. crude futures were trading 0.9% lower at $70.27 a barrel, while the Brent contract was down 0.7% to $76.15.
Both benchmarks reached their highest close in over six weeks on Wednesday, after the dollar slid to a six-week low.
Futures prices for gold rose by 1.6% to $1,980.65 per ounce, while the value of the euro against the US dollar increased by 0.2% to 1.0877.