U.S. stock futures showed positive movement early Thursday, as investors responded to Federal Reserve Chair Jerome Powell’s comments, which seemed to reassure the market. Powell’s suggestion that tariffs may not pose a major barrier to potential interest rate cuts helped fuel optimism among traders.
Market Reaction to Powell’s Comments
Dow Jones Industrial Average futures rose by 93 points, or 0.2%. Similarly, S&P 500 futures climbed 0.4%, and Nasdaq 100 futures gained 0.5%. These gains came after a positive reaction to the Federal Reserve’s recent actions, including its decision to keep interest rates steady during its March policy meeting.
Fed’s Rate Cuts and Inflation Outlook
At the meeting, the Fed maintained its forecast of two rate cuts by the end of the year, with Powell suggesting that inflation driven by tariffs might be temporary. This stance helped alleviate concerns about economic uncertainty and provided clarity for investors.
Clark Bellin, president and chief investment officer of Bellwether Wealth, emphasized the significance of Powell’s comments. “Jerome Powell’s press conference was the steady hand that the markets needed right now,” Bellin said. He noted that while Powell acknowledged tariffs could add to inflation and delay the Fed’s inflation target, the market appreciated Powell’s clear message that the economy remains strong despite recent volatility.
Treasury Yields and Quantitative Tightening
The yield on the 10-year Treasury bond stood at 4.237% on Thursday morning, a slight decrease from the previous day’s level above 4.3%. The Fed also made moves to slow the reduction of its $6.8 trillion asset portfolio, a decision that is expected to support stock market stability.
Bellin pointed out that the Fed’s move to slow quantitative tightening could help reduce market volatility. “This should aid the stock market and calm some of the turbulence,” he said.
GDP Growth Forecast Revised
While the outlook was generally positive, the Fed also revised its growth forecast for 2025. Policymakers now expect GDP growth of 1.7%, down from the previous December projection of 2.1%. This adjustment suggests a slightly slower pace of economic expansion in the coming years.
Related topics:
