TLDR
- The Nasdaq-100 futures rose 0.3% while Dow futures slipped slightly and the S&P 500 traded flat in Friday pre-market trading
- The Federal Reserve raised rates by 25 basis points and signaled at least one more hike before year-end
- The US dollar hit a seven-week high as markets priced in further rate increases
- Oil prices eased back to around $100 per barrel, offering some relief amid ongoing Iran war disruptions
- Chip stocks mostly recovered after an earlier sell-off triggered by Anthropic and OpenAI’s call to slow AI development
US stock futures were mixed on Friday morning as investors digested the Federal Reserve’s first rate hike in three years and ongoing concerns about artificial intelligence.
Nasdaq-100 futures climbed 0.3%, while Dow Jones futures dipped 0.1%. S&P 500 futures were roughly flat heading into the open.
Stocks had rebounded on Thursday, led by gains in tech. Falling oil prices and lower bond yields helped lift sentiment after the Fed’s widely expected 25 basis point rate hike on Wednesday.
Markets appeared to move past the Fed decision quickly. The hike had been priced in by most investors ahead of time.
More Rate Hikes Could Be Coming
Fed officials signaled at least one more rate increase before the end of the year. Analysts at ING said the Fed had “given the green light to markets to fully price in a hike in October” if inflation and energy data support it.
Not everyone is confident inflation is under control. JPMorgan Chase CEO Jamie Dimon told Yahoo Finance this week: “It’s not clear to me we’ve slayed inflation.”
The US dollar index rose to as high as 100.448, its strongest level in seven weeks. The move was driven by bets on further rate hikes from the Fed.
The dollar also got a boost from a weaker Japanese yen. The Bank of Japan raised rates by 25 basis points Friday, but its forward guidance fell short of what markets had been expecting.
Oil Prices Ease, Chip Stocks Recover
Oil prices slipped back toward the $100 level, giving some relief to markets. Crude has been elevated due to disruptions in the Strait of Hormuz as the war in Iran enters its seventh month.
The energy shock has kept inflation high and complicated the outlook for central banks around the world.
Chip stocks largely recovered after a rough stretch earlier in the week. The sell-off had been triggered by Anthropic and OpenAI calling for a slowdown in AI development.
The PHLX Semiconductor index was down only slightly on the week heading into Friday’s session.
Futures on US indexes continued to edge higher after the Bank of Japan’s rate decision, which pushed rates to their highest level in 31 years.
Investors are now watching whether the Fed’s moves, combined with easing energy prices, will be enough to bring inflation down without triggering a wider slowdown.
The next key test will come from incoming economic data, which could determine whether the Fed follows through on another hike in October.
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