Futures rise as Fed allays rate-hike worries

By Shristi Achar A and Shashwat Chauhan

(Reuters) -U.S. stock index futures advanced on Thursday, a day after the Federal Reserve left interest rates unchanged and allayed fears around potential rate hikes, with focus moving to a spate of earnings reports through the day.

While Fed Chair Jerome Powell indicated that stubbornly high inflation would see a long-expected U.S. rate cut pushed back, he refused to entertain talk that rates might actually need to go up again.

Money markets see a 55.6% chance of the first rate cut of at least 25 basis points (bps) being delivered in September, but have priced in a greater 69% chance of a cut in November, according to CME FedWatch tool.

“The Fed’s official statement did acknowledge a ‘lack of further progress’ in inflation reduction in recent months,” Preston Caldwell, chief U.S. economist at Morningstar, said.

“But Powell expressed the strong belief that current monetary policy is sufficiently restrictive to return inflation to the Fed’s 2% target eventually … therefore it’s unlikely the next policy move will be a hike.”

U.S. stocks initially rose, but the and the Nasdaq closed lower on Wednesday after the Fed decision.

Focus now moves to the key nonfarm payrolls data on Friday for a clearer outlook on the labor market and the interest rate path. Investors, on Thursday, will also keep an eye out for weekly jobless claims due at 8:30 a.m. ET and March factory orders data at 10 a.m. ET.

Of the 310 companies in the S&P 500 that have reported earnings as of Wednesday, 77.4% have surpassed earnings estimates, compared with the historical average of 67%, according to LSEG data.

At 07:07 a.m. ET, Dow E-minis were up 174 points, or 0.46%, S&P 500 E-minis were up 35.75 points, or 0.71%, and E-minis were up 162.75 points, or 0.93%.

Among early movers, Qualcomm (NASDAQ:) gained 5.2% in premarket trading after the smartphone chips supplier forecast quarterly sales and adjusted profit above Wall Street expectations.

Carvana surged 37.1% after the used-car seller forecast a surprise rise in current-quarter retail sales and core profit.

MGM Resorts (NYSE:) International added 7.2% after the casino operator beat first-quarter Wall Street estimates, driven by strength in its China operations.

DoorDash (NASDAQ:) lost 11.7% after the food delivery firm projected second-quarter core profit below estimates.

Etsy (NASDAQ:) shed 13.3% after the online marketplace missed Wall Street expectations for first-quarter gross merchandise sales and profit.