Dow Futures Rise After Index Falls 1,100 Points in 10th Consecutive Loss: Live Updates

 

Traders work on the New York Stock Exchange (NYSE) floor in New York City. 

Updated Thu, Dec 19 20247:38 AM EST

Stock futures rebounded on Thursday following a steep drop in the Dow Jones Industrial Average, which fell 1,100 points to its 10th consecutive loss after the Federal Reserve revised its rate outlook for next year. Dow futures rose by 260 points, or 0.6%, while S&P 500 futures increased by 0.7% and Nasdaq 100 futures gained 0.7%.

On Wednesday, stocks plummeted after the Fed dealt a blow to the bull market, signaling it would likely only reduce interest rates twice next year, down from the four rate cuts previously forecasted in September. The central bank also lowered its benchmark overnight borrowing rate by a quarter point to a range of 4.25% to 4.5%. The focus now shifts to 2025, as the future actions of policymakers remain uncertain.

Jeff Buchbinder, chief equity strategist at LPL Financial, commented on the market's vulnerability to a selloff, stating that "stretched positioning and sentiment" left stocks exposed. He noted that the increase in inflation expectations and the accompanying bond selloff provided an "excuse" for the downturn, especially as tech stocks lost their support, with no other sectors stepping in to fill the gap.

Federal Reserve Chairman Jerome Powell did little to reassure investors during his post-meeting remarks. He emphasized that the current rate of 4.3% is “meaningfully restrictive,” designed to make progress on inflation while maintaining a strong labor market. Powell also stated that recent rate cuts have allowed the Fed to “be more cautious as we consider further adjustments.”

In response to the Fed’s cautious outlook, the Dow Jones dropped 1,123 points, or 2.58%, to 42,326.87, marking its longest losing streak since 1974 and setting it on track for its worst weekly performance since March 2023. The S&P 500 fell 2.95%, and the Nasdaq Composite lost 3.56%. This was the largest single-day decline for both the Dow and S&P 500 since August, when the yen carry trade disruption caused a market selloff.

Treasury yields also surged following the Fed’s statement, further pressuring stocks. The 10-year Treasury yield jumped more than 13 basis points to surpass 4.50%, and it continued to rise on Thursday.

The Cboe Volatility Index (VIX), which gauges market uncertainty, spiked, reflecting heightened investor fear regarding the trajectory of interest rates.

In early Thursday trading, shares of Micron Technology plunged 14% after the chipmaker issued weaker-than-expected guidance for the second quarter. Bank of America downgraded the stock to neutral, cutting its price target amid expectations of continued weak gross margins in the coming quarters.

European markets also experienced declines, with the pan-European Stoxx 600 down 1.26%. Major European indexes such as Germany's DAX, France's CAC 40, and the UK's FTSE 100 saw losses of over 1% as well.

Asian markets followed suit, with the Japanese Nikkei 225 dropping 0.69%, and the South Korean Kospi losing 1.95%. The Japanese yen weakened against the U.S. dollar, while Hong Kong's Hang Seng index declined slightly.

Amid the global market selloff, some analysts, like Chris Rhine from Galaxy, suggested that the Fed's shift could benefit the cryptocurrency market in the long run, as digital assets are traditionally seen as a hedge against inflation.

In after-hours trading, Micron's shares continued to fall, down 15%, following disappointing second-quarter guidance. Meanwhile, Lennar, the homebuilder, saw its shares drop 8.4% after missing earnings estimates due to higher mortgage rates.

Nvidia also faced losses, marking its longest losing streak since September 2023, as the stock fell nearly 7% in December, despite a strong performance earlier in the year.