The Fed’s interest rate cut is driving a strong rally in stock futures, especially in the technology sector, while investors are taking a more optimistic stance on US equity.
The futures of Wall Street rise this Thursday as traders digest the decision of the Federal Reserve (Fed), announced on Wednesday, to reduce the interest rates by half a percentage point (0.5%).
In this context, the Dow Jones Industrial Average futures climbed 505 points, or 1.2%. Dow closed lower on Wednesday, immediately after the Fed’s announcement. Futures linked to the S&P 500 climb 1.6%, while futures of the Nasdaq 100 increased by 2.2%.
The Fed cut its benchmark interest rate to a range of 4.75% to 5% from 5.25% to 5.5%, surprising some investors who criticized the size of the initial cut. This is the first rate cut by the Fed in four years.
Wall Street: the ones that rise the most
Technology stocks rallied in premarket trading as the rate cut prompted investors to take a riskier stance. Nvidia and AMD shares climb more than 3% eachMicron Technology rises more than 2%. Other big tech companies like Meta and Alphabet are also up more than 2%.
nvidia
Reuters
Stocks linked to economic recovery, which is what lower rates are seeking to boost, also rose on Thursday morning. Financial giant JPMorgan Chase is up 1.3%. Industrial stocks Caterpillar and Home Depot are up about 2% each.
After fluctuating most of Wednesday afternoon, stocks finally closed lower. Both the S&P 500 and the 30-stock Dow initially hit new record highs just after the Fed announced its decision to cut interest rates.
Source: Ambito
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