US Stock Futures: Fed’s Decision To Keep Rates On Hold Weighs on Futures

U.S. stock futures fell early Thursday morning, a day after markets took a hit from the Fed announcement that interest rates would be kept at near-zero levels until at least 2023. Dow Futures were down 265 points at 27789, Nasdaq Futures down 120 points at 11148.75 and S&P Futures down 37.50 points at 3352.

Federal Reserve Chairman Jerome Powell said Wednesday the central bank would keep interest rates unchanged untill at least 2023, largely owing to the outlook for inflation and employment following the spread of the coronavirus pandemic.

The Fed also said risks to the country’s economy will persist without any fiscal stimulus. Powell warned about unemployment, foreclosures and evictions unless Congress granted additional fiscal stimulus. The Fed plans to continue with its “full range of support” for a certain period of time, including its ongoing $120 billion monthly asset purchases of government treasuries and mortgage bonds till the time the economy is “far along in its recovery”.

The statements - Powell described the pandemic-induced downturn “the most severe in our lifetime" - dampened spirits and reversed an initial U.S. stock market rally on Wednesday. The S&P 500 index dipped 0.5% to close at 3,385.49. The Nasdaq Composite index fell 1.3%.The Dow Jones Industrial Average closed marginally up at 28,032.38.