U.S. stock futures rose Thursday amid growing optimism that the Federal Reserve’s sudden interest rate cut will bring about a “soft landing” for the U.S. economy.
S&P 500 futures (ES=F) rose 1.6%, while Dow Jones Industrial Average (YM=F) futures rose 1.2%, both setting the stage for new all-time highs. Contracts on the tech-heavy Nasdaq 100 (NQ=F) led the gains, up 2.1%.
Stocks are on the rise as investors look more closely at the Federal Reserve’s decision to kick off its new rate cycle with a 50-basis-point cut. Following Wednesday’s policy announcement, indicators seesawed before closing lower.
Wall Street has absorbed Chairman Jerome Powell’s message that deep rate cuts in a relatively strong economy will ultimately stave off the risk of recession, and it’s a sign of faith, not panic, over current conditions.
Bank of America now thinks the Fed will cut rates by 0.75% before the end of the year, up from 0.50% it had previously forecast. By comparison, the central bank’s own “dot plot” indicates policymakers expect a reduction of half a percentage point.
Read more: What the Fed’s rate cut means for bank accounts, CDs, loans and credit cards
Rate-sensitive growth stocks rose in premarket trading, with the mega-caps of Big Tech that fueled this year’s rally all gaining. Alphabet (GOOG), Microsoft (MSFT), Meta (META) and Apple (AAPL) each rose about 2%, while Tesla (TSLA) and Nvidia (NVDA) rose about 3%.
With the Fed now in the dodge, some in the market have once again turned their attention to data releases, as they brace for potential volatility. The reading of weekly jobless claims due later on Thursday will shed light on the labor market, a key issue for rate-setters.