US pre-open: Stocks to extend gains on rate-cut hopes

21st Mar 2024 10:57

(Sharecast News) - US stock futures were on the rise on Thursday, extending gains from the previous session, after dovish comments from the head of the Federal Reserve raised hopes that rate cuts are on the cards in the coming months.

By 0710 ET, futures on the Dow were up 0.2%, while the S&P 500 was rising 0.3% and the Nasdaq gained 0.7%.

"All it took was the slightest hint of satisfaction by the Fed to make markets rally once again," says Russ Mould, investment director at AJ Bell.

The Fed on Wednesday afternoon kept interest rates unchanged at 5.25-5.50%, but nudged its forecasts for economic growth higher for the next two years.

While the central bank also predicted that inflation would fall slower than expected, Fed chair Jerome Powell said "the risks of achieving our inflation goals are coming into better balance". This, according to Mould, "was enough to give the market confidence that we'll soon see rate cuts, with three expected this year".

Mould added: "It didn't matter that yesterday's decision was to leave rates untouched, the market is focused on what might happen next and any fears that the Fed might become even more stubborn over changing monetary policy appear to have been blown out of the water."

Market sentiment was also bolstered by the Swiss National Bank, which made the surprise move on Thursday to cut interest rates, becoming the first central bank from a major developed economy to cut rates in the current cycle.

In domestic news, S&P PMI surveys on the US services and manufacturing sectors will be due out before the market opens, along with existing-home sales.

Meanwhile, in the corporate space, Reddit debuts on the New York Stock Exchange with shares priced at $34, valuing the social media group at $6.4bn.