US stocks rise on Fed rate cut cheer; “soft landing” hopes rise

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Investing.com– U.S. stock index futures rose Thursday, pointing to the continuation of a record-high run after the Federal Reserve stuck to its forecasts of at least three rate cuts this year. 

At 07:00 ET (11:00 GMT), Dow Jones Futures rose 90 points, or 0.2%, S&P 500 Futures rose 18 points, or 0.4%, and Nasdaq 100 Futures climbed 130 points, or 0.7%.

The major indices closed higher Wednesday, with the S&P 500 gaining 0.9%, while the NASDAQ Composite and the Dow Jones Industrial Average both rising more than 1%, all closing at new record highs. 

While Fed Chair Jerome Powell still projected some caution over sticky inflation, markets were cheered by Fed officials maintaining their forecasts on lower rates this year. Powell also flagged continued resilience in the U.S. economy – a trend that bodes well for corporate earnings. 

PMI data to offer economic cues 

Risk appetite has been boosted by the prospect of lower interest rates and a resilient U.S. economy, with Powell reiterating his expectations for a  “soft landing” for the U.S. economy.

Goldman Sachs economists said in a Wednesday note they believe that Federal Reserve are unlikely to delay rate cuts for an extended period and are planning the first reduction at the June meeting.

“We continue to expect cuts in June, September, and December, for a total of 3 cuts in 2024,” they added.

The focus now turns to upcoming purchasing managers index readings for March, which are expected to offer more cues on the U.S. economy.

Both manufacturing and services activity is expected to have remained comfortably in expansion so far in March. 

Weekly initial jobless claims and existing home sales data are also due for release.

Micron soars on upbeat guidance 

Earnings are due from Darden Restaurants (NYSE:DRI) before the open, while FedEx (NYSE:FDX) and Nike (NYSE:NKE) are due to provide numbers after the close.

Micron Technology (NASDAQ:MU) will also be in the spotlight after the chipmaker soared premarket provided upbeat guidance for the current quarter after recording a surprise profit in the fiscal second-quarter, as it benefited from increased demand from the AI industry.

On the flip side, Five Below (NASDAQ:FIVE) stock fell after the discount retailer missed quarterly expectations and posted weak guidance.

iPhone maker Apple (NASDAQ:AAPL) fell premarket after Bloomberg reported that the Department of Justice was planning to sue the firm by as soon as Thursday for potentially violating antitrust law.

Crude hands back some gains

Oil prices drifted lower Thursday, handing back some of the recent gains prompted by the Fed announcement and a fall in U.S. crude and gasoline inventories. 

By 07:00 ET, the U.S. crude futures traded 0.2% lower at $81.13 a barrel, while the Brent contract dropped 0.2% to $85.81 per barrel. Both contracts are up over 10% to far this year.

The dollar index fell sharply after the Fed flagged three interest rate cuts in 2024, despite the robust strength of the U.S. economy, which presents a positive scenario for oil demand.

Also helping was data showing crude stockpiles in the United States, the world’s biggest oil consumer, fell unexpectedly for a second week, dropping by 2 million barrels as exports rose and refiners continued to increase activity. 

Gasoline inventories also fell, this time for a seventh week, by 3.3 million barrels, suggesting steadily strong fuel demand.

(Ambar Warrick contributed to this article.)