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Mar 21, 2019

US Future Markets Indications | Dow futures point to a lower open after Fed signals no rate hike this year

Fred Imbert, Silvia Amaro

U.S. stock index futures fell on Thursday morning as investors digested the Federal Reserve’s latest announcement on monetary policy.
At 6:27 a.m. ET, Dow Jones Industrial Average futures indicated a decline of 81 points at the open. Futures on the S&P 500 and Nasdaq 100 were mixed.
The Dow closed lower on Wednesday after the Federal Reserve announced a more dovish policy. Jerome Powell, the Fed’s chair, said the central bank is forecasting no rate hikes in 2019, which is down from two hikes forecast earlier. U.S. Treasury yields fell on the news, which added pressure on certain stocks, including banks.
Rising rates are good for banks since they are able to lend out money to investors at a profitable rate of interest. Lower interest rates restrict the bank’s ability to make profits thus adding pressure on margins.
The central bank also lowered its growth outlook for 2019 and indicated it would end its balance-sheet reduction process by the end of September.
“While the Fed continues with the wait-and-see policy stance, we think it would require a material deterioration in growth or some exogenous shock to the markets for the Fed to be completely done raising rates in the current cycle,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. “The prospects for the U.S. economy remain positive relative to the rest of the global economy.”
U.S.-China trade is also in focus for investors after mixed comments from the White House. President Donald Trump said Wednesday that Washington’s tariffs on Beijing could stay on for a “substantial period of time.”
On the data front, there will be jobless claims out at 8:30 a.m. ET. And in corporate news, Tencent, Darden Restaurants, and Nike are set to publish their latest results.

Source: CNBC

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