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Micron plummets after downbeat quarterly forecast
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Lennar down after Q4 results come in below estimates
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Futures up: Dow 0.82%, S&P 500 0.81%, Nasdaq 0.75%
(Updates before markets open)
By Medha Singh and Purvi Agarwal
Dec 19 (Reuters) -
Wall Street's main indexes were set for a higher open on Thursday, a day after the Federal Reserve's projections of fewer-than-expected interest rate cuts and higher inflation next year wrong-footed some investors and pummeled U.S. stocks.
The Fed on Wednesday said it expects to make just two 25 basis point cuts in 2025, half a percentage point less than its September forecast and raised inflation expectations for the first year of the new Trump administration, sending the three main U.S. stock indexes to their sharpest daily declines since August.
Traders now see just one quarter-point rate reduction by mid-2025, and see less than two cuts in total by the end of the year, compared with last week's expectations of three rate cuts.
"The market tends to 'pop after a drop' but I wouldn't be surprised if we end up giving back much of the gains toward the end of the day because investors don't want to be over exposed over the weekend," said Sam Stovall, chief investment strategist of CFRA Research.
The benchmark S&P 500 hit a near one-month low on Wednesday as investors adjusted their risk exposure to reflect the impact of higher borrowing costs in 2025, while the Dow
dropped for the tenth straight session, its longest streak of losses since 1974.
At 8:37 a.m. ET, Dow E-minis were up 347 points, or 0.82%, S&P 500 E-minis were up 48 points, or 0.81% and Nasdaq 100 E-minis were up 160 points, or 0.75%.
The hawkish shift from the Fed comes just three months after the U.S. central bank began its monetary easing cycle with a larger-than-usual 50 basis point interest rate cut that spurred risk appetite and helped push Wall Street to record levels.
"Projecting only two rate cuts next year indicates that the Fed acknowledges the ongoing 'remarkable' strength of U.S. economic conditions and suggests that further reductions in their policy rate may not be necessary," said JoAnne Bianco, partner and investment strategist at Bondbloxx.
Meanwhile, data on the day showed gross domestic product for the third quarter was revised up at 3.1%, from 2.8% earlier, while the number of Americans filing new applications for jobless benefits fell more than expected last week, consistent with a gradual cooling in labor market conditions.
The CBOE volatility index , Wall Street's fear gauge, eased to 21.27 points from a four-month high of 28.32 a day earlier.
Stocks broadly recovered some ground in premarket trading from sharp losses on Wednesday. Megacap Tesla and Nvidia gained over 2% each.
Among corporate news, Micron slumped 11.7% after its forecast of quarterly revenue and profit below estimates.
Accenture gained nearly 5% as the IT services provider
beat
Wall Street estimates for first-quarter revenue, while homebuilder Lennar shed 8% after
reporting
fourth-quarter results below estimates.
Vertex Pharmaceuticals tumbled 11% after the company said its experimental non-opioid drug showed little difference versus a placebo in reducing pain in a mid-stage study.
(Reporting by Medha Singh and Purvi Agarwal in Bengaluru; Editing by Maju Samuel)
((Medha.Singh@thomsonreuters.com; +91 80 6210 0592; X, formerly Twitter: @medhasinghs;))
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