U.S. stocks looked set to pare back some of their losses on Thursday after Federal Reserve Chair Jerome Powell put a lump of coal in markets’ Christmas stocking by signaling that sticky inflation means investors shouldn’t expect deep rate cuts next year.
Futures tracking the Dow Jones Industrial Average climbed 321 points, or 0.8%. S&P 500 futures rose 0.8%, and contracts tied to the tech-heavy Nasdaq 100 climbed 0.7%. All three indexes had plummeted on Wednesday, with Powell’s hawkish presser sinking the Dow by 1,100 points to lock in its longest losing streak in half a century.
The mini-rebound will do little to ease Wall Street’s somber mood. The Fed stuck to the script by cutting interest rates by a quarter of a point, but Powell delivered a message nobody wanted to hear: Because inflation is still running above the central bank’s 2% target, investors should only expect it to slash borrowing costs twice next year.
