US pre-open: Stocks seen higher as investors continue to cheer Fed

Stocks on Wall Street looked set for a positive open on Thursday as investors continued to take heart from the Federal Reserve’s more dovish than expected stance on rate hikes.

At 1100 GMT, Dow Jones Industrial Average, S&P 500 and Nasdaq futures were all up 0.3%.

On Wednesday, stocks ended higher after the US central bank lifted the funds rate to between 0.75% and 1.00%, as expected. However, it indicated that further rate rises would be “gradual” and officials stuck to their outlook for two more rate hikes this year and three the next. Many market participants had been expecting the Fed to sound a more hawkish note.

Although stocks got a lift, the Fed’s dovishness hit the dollar, which slid on the back of the statement. By Thursday, however, the currency was beginning to claw back some ground, trading up 0.2% versus the pound, 0.1% against the euro and flat compared to the yen.

Oanda’s Craig Erlam said: “In raising interest rates by 25 basis points – as they strongly hinted they would ahead of the decision – and sticking to their forecasts of three rate hikes this year, the Fed appeared to tick every box. The rate hike shows confidence in the economy and by resisting any urge they may have had to raise expectations, to say four hikes this year, as some anticipated, they’ve kept investors onside and not raised concerns about the risk of raising too quickly.

“In essence, the Fed has struck a good balance and investors are clearly on board.”

Over in Europe, the main indices gained as relief set in after Dutch Prime Minister Mark Rutte won an election victory in the Netherlands, fighting off far-right rival Geert Wilders.

In corporate news, software company Oracle Corp rallied in pre-market trade after its third-quarter earnings late on Wednesday came in ahead of expectations.

Sports camera maker GoPro was trading sharply higher after it announced job cuts late on Wednesday and said it expects to be profitable on an adjusted basis this year.

Retailer Williams-Sonoma was also on the front in pre-market trade as its fourth-quarter profit beat analysts’ expectations.

Earnings are due from Dollar General Corp before the open, and Adobe Systems after the close

On the data front, housing starts, initial jobless claims and the Philadelphia Fed manufacturing survey are all due at 1230 GMT.