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Stock futures gained Thursday as Treasury yields fell, with investors betting the Federal Reserve could be done raising rates for 2023.
Futures tied to the Dow Jones Industrial Average added 171 points, up 0.5%. S&P 500 futures gained 0.7%, and Nasdaq 100 futures advanced 1.1%.
Bond yields declined, with the benchmark 10-year Treasury yield last falling about 11 basis points to around 4.68%.
Moderna shares dropped 10% in the premarket after the pharma giant reported a sharp third-quarter loss. SolarEdge tumbled more than 15% after posting an unexpected loss and offering dismal guidance for fourth-quarter revenue.
Those moves come after the Fed on Wednesday kept interest rates unchanged again and upgraded its assessment of the U.S. economy. To be sure, Chair Jerome Powell would not rule out a rate increase at the December meeting.
“We expected Powell to talk tough and do his best to keep markets from taking the two successive ‘skips’ in interest rate hikes as a green light for risk assets,” said Chris Zaccarelli, chief investment officer for the Independent Advisor Alliance. But, “we were surprised at how detailed he has been in his language that the Fed is still worried about inflation and wouldn’t hesitate to raise rates again in the near future.”
Investors digested further signs of softening in the labor market. Weekly jobless claims on Thursday ticked higher to 217,000 for week ending Oct. 28, more than the 210,000 in the previous week and the 214,000 consensus estimate from Dow Jones.
Stocks rallied Wednesday following the Fed decision. The Dow climbed more than 200 points on Wednesday, while the S&P 500 and Nasdaq Composite each ended up more than 1%.
On the economic front, closely watched statistics on nonfarm payrolls, the unemployment rate and hourly wages are slated for release on Friday morning.
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