U.S. stock futures climbed Thursday as investors moved to recover losses from the previous session, when the Federal Reserve raised interest rates for the first time in three years.
The Dow Jones Industrial Average futures were up 406 points, or 0.78%, while S&P 500 futures were 0.83% higher and Nasdaq-100 futures climbed 1.09%.
The rebound follows a rough Wednesday for markets. Wednesday’s session saw the blue-chip Dow shed more than 630 points, or 1.2%, weighed down by weakness in financial services stocks, while the S&P 500 slipped 0.5% and the Nasdaq Composite closed only fractionally in the red.
Wednesday’s decision brought the overnight federal funds rate up by 25 basis points, pushing the target range to 3.75%–4%, and officials indicated additional tightening may follow, with Fed Chairman Kevin Warsh citing inflation that is still running too hot.
Falling oil prices are contributing to the equity rebound, according to The Wall Street Journal. Analysts pointed to growing optimism that a damaged Saudi pipeline would cause less disruption to Middle Eastern oil exports than markets had initially priced in as a driver of crude’s retreat. Brent crude futures dropped more than 2% to roughly $103.28 a barrel, pulling back from highs above $109 reached earlier in the week, and U.S. crude was off more than 1.5% at around $100 a barrel.
The 10-year Treasury yield slipped to just below 5%, retreating alongside the dollar after both climbed on Wednesday.
In other central bank news, the Bank of England held rates steady on Thursday, according to the Journal.
In a note published Thursday, UBS Global Wealth Management’s chief investment officer, Mark Haefele, wrote that his team had maintained positions for further equity gains even as it prepared for near-term volatility. “If tightening remains measured, credit spreads remain stable, and profits continue to grow, the rally should have scope to broaden across sectors and regions,” Haefele said, according to CNBC.
Overseas markets were mixed. Japan’s Nikkei 225 closed 0.33% higher and Australia’s S&P/ASX 200 rose 0.41%, while South Korea’s Kospi ended flat and mainland China’s CSI 300 fell 0.45%. European equities were broadly higher in early Thursday trade, with the pan-European Stoxx 600 up 0.5%; London’s FTSE 100 and Germany’s DAX posted identical gains of 0.5%.
Attention is turning to Thursday’s slate of economic releases, with weekly jobless claims figures and August housing starts data on tap ahead of the opening bell.
