Pre-Market Update: Stock Futures Rise as Investors Buy the Dip After Fed Rate Hike

TLDR

• Stock futures are rising Thursday after Wednesday’s Fed-driven selloff
• The Fed raised interest rates by 25 basis points, its first hike in three years
• Fed Chair Kevin Warsh signaled at least one more rate hike is coming this year
• Oil prices are falling, with Brent crude dropping toward $99 a barrel
• President Trump publicly criticized the rate hike, claiming he spoke with Warsh before the FOMC meeting

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US stock futures are climbing Thursday morning as investors shake off Wednesday’s losses and buy the dip following the Federal Reserve’s first interest rate hike in more than three years.

Dow Jones Industrial Average futures rose around 1.2%, gaining over 600 points. S&P 500 futures advanced 1.2% and Nasdaq 100 futures jumped 1.6%.

Fed Raises Rates for First Time in Three Years

The Federal Reserve raised its benchmark interest rate by 25 basis points on Wednesday. Fed Chair Kevin Warsh signaled that at least one more hike could come later this year.

The move sent stocks lower on Wednesday. The S&P 500 and the Dow both dropped as investors reacted to the hawkish tone from Warsh.

But analysts say the reaction may have been overdone. Bob Edwards, chief investment officer at Edwards Asset Management, called the post-Fed selloff “an overreaction and a buyable dip.”

“When stock prices fall without a comparable decline in prospects, that is a classic sign of a buying opportunity,” Edwards said.

Some on Wall Street welcomed the hike, saying it helps restore the Fed’s credibility on inflation, even as it puts the central bank at odds with the White House.

President Trump publicly pushed back on the decision. Trump said he called for lower rates and claimed he spoke with Warsh before the FOMC meeting took place.

“You might as well vote with the board because it’s not going to matter,” Trump said he told Warsh.

Oil Prices Pull Back, Easing Pressure on Markets

Oil prices are also helping lift the mood in markets Thursday. Brent crude dropped around 1% to near $99 a barrel. West Texas Intermediate fell about 0.6% to around $101.77 a barrel.

US Energy Secretary Chris Wright said Saudi Arabia’s East-West pipeline, a key oil route that bypasses the Strait of Hormuz, would be restored soon. That news helped push prices lower.

Falling oil prices are giving some relief to inflation concerns and helping bond yields ease. The yield on the 10-year Treasury note dipped 3 basis points to 4.99% in early trading.

On the economic calendar Thursday, investors are watching initial jobless claims and housing starts data.

The Bank of England also voted to hold its benchmark lending rate steady at 3.75%, keeping its own policy unchanged for now.

Markets are open and watching how the Fed’s first rate hike in three years plays out for both growth and inflation in the weeks ahead.