Stock futures were mixed Thursday morning after the Federal Reserve’s latest policy update.
Futures linked to the Dow Jones Industrial Average added 44 points. S&P 500 futures rose 0.1% and Nasdaq 100 futures were slightly lower.
In regular trading, the Dow fell 142 points, while the S&P 500 fell 0.61% and the Nasdaq Composite fell 0.76%.
Major indexes reacted negatively as investors digested the latest comments from the Federal Reserve following a hike in its overnight borrowing rate. The central bank said it would continue to raise rates until 2023 and projected a higher-than-expected terminal rate of 5.1%. With Wednesday’s half-percentage-point increase, the target range for rates is currently 4.25% to 4.5%, which is the highest in 15 years.
“The Fed just put a hurdle in front of Santa’s sleigh,” said Sylvia Jablonski, CEO and chief investment officer of Defiance ETFs.
He also noted the tone of Fed Chairman Jerome Powell, who in Wednesday afternoon’s speech sounded “tough” and clear that he has “no plans to pause or take a reverse course.”
“It will be higher for longer and monetary policy will be more restrictive than previously thought,” Jablonski said. “The market will be hurt by Fed policy for a while longer. While we like the news and we like to see the CPI prints as the latest to spark a short-lived rally, this will give us some short-term volatility.”
Despite favorable improvements such as modest growth, spending and output, Powell indicated he remains concerned that job gains are too robust and the unemployment rate too good for the Fed’s fight against inflation.
Investors will have another batch of economic data to digest on Thursday. The Philadelphia Fed retail sales, jobless claims and manufacturing index are due for release at 8:30 am ET.