Lingering Economic Worries May Lead To Pullback On Wall Street

The major U.S. index futures are currently pointing to a lower open on Thursday, with stocks likely to give back ground after ending the previous session sharply higher.

Traders may look to cash in on yesterday’s gains amid lingering concerns about the economic outlook following the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed announced its widely expected decision to leave interest rates unchanged, but forecasts suggest officials still expect to resume cutting rates later this year.

However, the Fed officials also lowered their projections for GDP growth in 2025 to 1.7 percent from 2.1 percent and raised their forecasts for consumer price growth this year to 2.7 percent from 2.5 percent.

Fed Chair Jerome Powell said during his post-meeting press conference that a “good part” of the higher inflation forecast is due to tariffs.

Following the sharp pullback seen in Tuesday’s session, stocks showed a strong move back to the upside during trading on Wednesday. With the rally, the major averages largely offset Tuesday’s steep losses.

The major averages pulled back off their best levels going into the close but remained sharply higher. The Nasdaq surged 246.67 points or 1.4 percent to 17,750.79, the S&P 500 jumped 60.63 points or 1.1 percent to 5,675.29 and the Dow climbed 383.32 points or 0.9 percent to 41,964.63.

Stocks showed a notable rebound early in the session and saw further upside following the Federal Reserve’s monetary policy announcement.

The Fed announced its widely expected decision to once again leave interest rates unchanged, but projections signaled the central bank is still likely to lower rates later this year.

The Fed said it decided to maintain the target range for the federal funds rate at 4.25 to 4.50 percent in support of its dual goals of maximum employment and inflation at the rate of 2 percent over the longer run.

At the Fed’s last meeting in late January, the central bank also left rates unchanged after it lowered rates by a total of 100 basis points or 1.0 percentage point over the three previous meetings.

The accompanying statement noted “uncertainty around the economic outlook has increased,” and the Fed said it is “attentive to the risks to both sides of its dual mandate.”

With regard to the outlook for rates, Fed officials still forecast rates in a range of 3.75 to 4.0 percent by the end of the year.

The forecast was unchanged from last December and suggests the Fed is likely to cut rates by a quarter point two times later this year.

The central bank also announced it has decided to slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion beginning in April.

“The Fed indirectly cut rates today by taking action to reduce the pace of runoff of its Treasury holdings,” said Jamie Cox, Managing Partner for Harris Financial Group. “The Fed has multiple things to consider in the balance of risks, and this move was one of the easiest choices.”

He added, “This paves the way for the Fed to eliminate runoff by summer, and, with any luck, inflation data will be in place where reducing the Federal Funds rate will be the obvious choice.”

Airline stocks showed a strong move back to the upside after seeing significant weakness on Tuesday, with the NYSE Arca Airline Index soaring by 2.6 percent.

Significant strength was also visible among brokerage stocks, as reflected by the 2.4 percent surge by the NYSE Arca Broker/Dealer Index.

Computer hardware, networking and banking stocks also saw considerable strength, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are rising $0.11 to $67.27 a barrel after climbing $0.26 to $67.16 a barrel on Wednesday. Meanwhile, after inching up $0.40 to $3,041.20 an ounce in the previous session, gold futures are edging up $5.20 to $3,046.40 an ounce.

On the currency front, the U.S. dollar is trading at 148.62 yen versus the 148.69 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0841 compared to yesterday’s $1.0903.

Asia

Asian stocks ended mixed in thin trading on Thursday, with Japanese markets closed for a holiday. Chinese and Hong Kong markets fell as the People’s Bank of China kept the 1-year loan prime rate at 3.1 percent and the 5-year LPR at 3.6 percent despite economic concerns.

Sentiment remained underpinned elsewhere after the U.S. Federal Reserve issued a dovish policy outlook and Ukraine’s President said his country is ready to implement a pause in strikes on energy and infrastructure.

The Fed’s commitment to cut interest rates weakened the dollar and lifted gold prices to another record high, while oil prices extended their recent rebound.

China’s Shanghai Composite Index dropped 0.5 percent to 3,408.95 after BofA securities warned China’s stock rally may face a “meaningful correction soon.”

Hong Kong’s Hang Seng Index tumbled 2.2 percent to 24,219.95, with tech and real estate stocks pacing the decliners. Tencent Holdings lost 3.8 percent after it outlined plans to boost spending on AI infrastructure.

Seoul stocks rose, with the Kospi finishing 0.3 percent higher at 2,637.10. Samsung Electronics rallied 2.9 percent after the company pledged to strengthen its position in the high-bandwidth memory chip market in response to shareholder criticism.

Australian markets rallied as falling U.S. Treasury yields boosted demand for high-yielding banking stocks.

The benchmark S&P/ASX 200 Index jumped 1.2 percent to 7,918.90, notching its best daily performance in six weeks.

The broader All Ordinaries Index settled 1.2 percent higher at 8,148.90, with banks, gold miners and tech stocks leading the surge.

Data showed earlier today that Australia’s unemployment rate held steady at 4.1 percent in February, but employment unexpectedly declined, raising concerns about labor market softness.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index finished marginally higher at 12,054.72 as fourth-quarter GDP data beat forecasts.

Europe

European stocks have moved mostly lower during trading on Thursday as the Bank of England announced its widely expected decision to leave interest rates unchanged.

The nine-member committee voted 8-1 to maintain the Bank Rate at 4.5 percent. Swati Dhingra sought a quarter point reduction. Previously, the BoE had reduced the rate by 25 basis points in February after two such reductions last year.

“There was no presumption that monetary policy was on a pre-set path over the next few meetings,” the bank said. “Monetary policy would need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term had dissipated further.”

Earlier in the day, the Swiss National Bank cut its policy interest rate by 25 basis points, while its Swedish counterpart left rates unchanged.

While the U.K.’s FTSE 100 Index is down by 0.3 percent, the French CAC 40 Index is down by 1.1 percent and the German DAX Index is down by 1.6 percent.

Among individual stocks, German engine manufacturer Deutz has moved notably lower after 2024 adjusted earnings almost halved.

Stratec SE has also shown a significant move to the downside after postponing the release of its annual report.

RWE has also slumped. The utility said it would cut investments by more than a fifth until the end of the decade.

French caterer Sodexo has also tumbled after lowering its full-year revenue and profit margin guidance.

Meanwhile, Prudential has jumped after it announced a health insurance joint venture with India-based HCL Group.

U.S. Economic News

First-time claims for U.S. unemployment benefits crept slightly higher in the week ended March 15th, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims inched up to 223,000, an increase of 2,000 from the previous week’s revised level of 221,000.

Economists had expected jobless claims to rise to 224,000 from the 220,000 originally reported for the previous week.

The Labor Department said the less volatile four-week moving average also edged up to 227,000, an increase of 750 from the previous week’s revised average of 226,250.

A separate report released by the Federal Reserve Bank of Philadelphia on Thursday said regional manufacturing activity expanded overall but was less widespread in the month of March.

The Philly Fed said its diffusion index for current general activity slid to 12.5 in March after plunging to 18.1 in February, although a positive reading still indicates growth. Economists had expected the index to slump to 8.5.

The report also said the survey’s future indicators suggest less widespread expectations for growth over the next six months, with the diffusion index for future general activity tumbling to 5.6 in March from 27.8 in February.

At 10 am ET, the National Association of Realtors is scheduled to release its report on existing home sales in the month of February. Existing home sales are expected to decrease to an annual rate of 3.95 million in February after tumbling to a rate of 4.08 million in January.

The Conference Board is also due to release its report on leading economic indicators in the month of February at 10 am ET. The leading economic index is expected to dip by 0.2 percent in February after falling by 0.3 percent in January.

At 11 am ET, the Treasury Department is scheduled to announce the details of this month’s auctions of two-year, five-year and seven-year notes.