Stock Futures Rise As Fed Rate Cuts And Inflation Come Into Focus 

Inflation

Following a rocky start to the week due to concerns over the trajectory of interest rates and inflation, U.S. stock futures saw a spike higher on Thursday.

Stocks Dropped

Investors are anticipating this Friday’s highly anticipated U.S. jobs data. The Dow Jones Industrial Average saw its futures rise 90 points, or 0.2%, following the index’s 43-point loss on Wednesday, which left it at 39,127.

S&P 500 futures increased by 0.3%, with contracts matching the 0.4% increase in the tech-heavy Nasdaq. The benchmark 10-year U.S. Treasury note’s yield remained below 4.37%.

This week, stocks dropped from record highs due to indications of ongoing inflation in economic statistics, which may put pressure on the Federal Reserve to maintain higher interest rates for longer than.

Losses were contained on Wednesday thanks to comments made by Fed Chairman Jerome Powell and a good deflationary trend in data.

On Thursday, optimism increased as rate cuts were once again expected. Henry Allen, a Deutsche Bank analyst, stated that “markets regained their composure over the last 24 hours, as investors were relieved after Fed chair Powell stuck to his recent views on the economic outlook.”

Rate Cuts

“It all served to support market pricing, which continues to anticipate rate cuts from the Fed of 71 basis points by the December meeting.”

Inflation
Source: Yahoo Finance

The Fed’s remarks and more economic data, which are scheduled for release on Thursday, will be closely watched by investors as they may contribute to the narrative surrounding the inflationary environment and the likely rate path of the central bank.

However, the main attention is on Friday’s U.S. jobs report, one of the most eagerly anticipated economic data points.

“The non-farm payrolls report for March, which is scheduled for release on Friday, is the key near-term risk for the interest rate outlook,” broker XTB analyst Kathleen Brooks stated.

“We believe, however, that a reading close to the expected level is unlikely to significantly alter market expectations for interest rates in the United States.”

The weekly jobless claims and the February trade balance will be released tomorrow. Numerous Fed officials, including regional Fed presidents Patrick Harker, Thomas Barkin, Austan Goolsbee, Loretta Mester, and Neel Kashkari, are scheduled to make public remarks as well.

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