Stock futures rose early Thursday as major averages responded positively to the Federal Reserve’s forecast for two interest rate cuts in 2025. Futures linked to the Dow Jones Industrial Average increased by 130 points, or 0.31%, while S&P 500 futures rose nearly 0.45% and Nasdaq 100 futures climbed about 0.58%.
The Fed kept the federal funds rate steady in the range of 4.25% to 4.5%, maintaining a widely expected approach. Despite projecting higher inflation and lower economic growth, the central bank’s forecast for two rate cuts in 2025 boosted investor sentiment. Stocks rebounded from a sell-off that persisted since February, with the Dow jumping 0.9%, the S&P 500 surging just over 1%, and the Nasdaq Composite gaining 1.4% but still remaining in correction territory, over 10% off its high.
The S&P 500 is more than 7% below its record high, attempting to end a four-week losing streak. Federal Reserve Chair Jerome Powell characterized the potential inflationary effects of tariffs as likely being short-lived or transitory. Elyse Ausenbaugh, head of investment strategy at J.P. Morgan Wealth Management, noted this as a signal that investors believe the Fed can manage inflationary pressures effectively.
Earlier in March, President Donald Trump mentioned a “period of transition” in the economy, influenced by his tariff policies, which include an impending expiration of a reprieve from duties on select Canadian and Mexican imports set for April 2. Market participants are now eyeing upcoming weekly jobless claims data, the Philadelphia Fed’s manufacturing survey, and existing home sales reports.
SoftBank acquires Ampere Computing
In other news, SoftBank announced on Wednesday that it would acquire chip designer Ampere Computing for $6.5 billion. The transaction, which is expected to close in the latter half of this year, will allow Ampere to retain its headquarters in Santa Clara, California.
Market volatility may persist beyond April 2, according to Michael Green, chief strategist at Simplify Asset Management. He indicated that uncertainty surrounding currency deals and the potential reintroduction of tariffs will continue to influence market behavior.
On the quarterly earnings front, companies such as Darden Restaurants, Nike, FedEx, and Micron Technology are scheduled to report their financial results on Thursday.
US stocks rallied on Wednesday following the Fed’s decision to hold interest rates steady, accompanied by revised economic projections characterized as dovish. The Nasdaq Composite led the gains, rising over 1.4%, while the Dow surged 375 points or 0.9%, and the S&P 500 gained 1.1%. The Fed projected two interest rate cuts this year, despite lowering growth forecasts and raising inflation expectations.
Why S&P 500 futures fell 0.6% and Dow suffered the worst week since 2023
The central bank’s announcement highlighted minimal changes from the December outlook, with diverse views among Fed officials on the number of rate cuts anticipated. Powell reiterated that inflation impacts from tariffs are likely transitory and suggested that the labor market remains balanced despite increasing recession concerns.
Investor confidence increased, leading to notable stock rebounds in technology companies, including Nvidia, which rose 1.8%, and Tesla, whose shares jumped over 4.5% following an analyst upgrade. Investors used good news to support market recovery after significant recent losses, with the S&P 500 index previously down 6% from its January meeting, marking the largest drop since mid-2022.
Market analysts acknowledged ongoing uncertainties and cautioned that despite the positive momentum in stocks, a significant amount of technical damage remains. The Fed’s conditional dovish stance may indicate future responsiveness to economic data changes, particularly in the face of persistent inflation risks.
Finally, the Fed’s decision to slow the pace of reducing its Treasury holdings has been received positively among investors, reinforcing a risk-on mood in the market.
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