US stock futures saw modest gains as Wall Street processed conflicting signals from the Federal Reserve after its decision to keep interest rates unchanged.
Futures linked to the Dow Jones Industrial Average (YM=F) remained steady, while S&P 500 (ES=F) futures rose by 0.1% and Nasdaq Composite (NQ=F) futures increased by 0.2%.
Fed’s Decision Sparks Initial Optimism
Markets initially surged following the Fed’s announcement on Wednesday, fueled by the central bank’s commitment to two more rate cuts later this year. Federal Reserve Chair Jerome Powell reassured investors, stating that the economic impact of President Donald Trump’s trade war appeared manageable, and that the risks of a recession remained low.
Mixed Reactions as Fed’s Economic Projections Weigh on Markets
However, by Thursday, the initial optimism began to fade as investors focused on the Fed’s updated projections. The central bank revised its outlook to reflect higher inflation and slower economic growth, raising concerns about the economy as more tariffs loom on the horizon.
Historical Context Raises Concerns
Some analysts pointed out that the last time the Fed described inflation risks as “transitory,” as Powell did in his Wednesday press conference, it was followed by the most aggressive rate hike campaign in decades. This raised questions about future Fed actions and their impact on the market.
Uncertainty Ahead: Trade War and Upcoming Deadlines
With less than two weeks to go before the next major deadline for President Trump’s trade policy, uncertainty continues to grip Wall Street. Trump has allowed himself flexibility to negotiate with other countries in the interim, leaving many investors anxious about the potential for more volatility in the near future.
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