US pre-open: Futures sharply higher following Fed's big rate cute
Wall Street futures were firmly in the green ahead of the bell on Thursday as traders celebrated the Federal Reserve's decision to slash interest rates by half a percentage point.
As of 1230 BST, Dow Jones futures were up 1.19%, while S&P 500 and Nasdaq-100 futures had the indices opening 1.65% and 2.13% firmer, respectively.
The Dow closed 103.80 points lower on Wednesday despite initially rallying to a fresh record high on the back of the Fed's announcement.
The US central bank cut its overnight lending rate to a range of 4.75% to 5%, down from 5.25% to 5.5%, which surprised many investors and analysts with its first rate reduction in four years, most of which were expecting a 0.25% cut.
Scope Markets' Joshua Mahony said: "Thankfully the risk-on move we have seen since the FOMC meeting highlights a successful job by Powell, who could have easily spooked the markets should he adopt the wrong tone. Instead, the decision to kick off with a oversized hike came alongside economic projections that allayed fears of a recession or significant uptick in unemployment, casting aside the fears that have sparked jitters over the course of the past weeks.
"The data-driven nature of the Fed will ensure that traders remain highly attentive to the economic calendar, with a rebound in inflation the particular concern given the implications it would have on the Fed's plan to ease further. Nonetheless, this week marks the beginning of a new phase where the strength of the economy is prioritised over the Fed’s recent blind dedication to driving down inflation."
On the macro front, weekly jobless claims data and a preliminary reading of the Philadelphia Fed's manufacturing survey will be published at 1330 BST, while August existing home sales figures will follow at 1500 BST.
Reporting by Iain Gilbert at Sharecast.com