
Futures Rise Following Fed Decision, Anticipation of Apple Earnings
U.S. Futures Rise Following Fed Decision
U.S. stock futures are indicating a positive start as markets assess comments from Federal Reserve Chair Jerome Powell after the central bank opted to keep interest rates steady for a second consecutive meeting. Apple is set to release its latest quarterly earnings, with analysts keenly watching for any insights regarding performance in the critical December quarter. Additionally, Shell has announced an increase in its share buybacks, positively impacting the company’s stock.
1. Futures Up After Fed Decision
On Thursday morning, U.S. stock futures showed gains as investors processed the Federal Reserve’s choice to maintain interest rates unchanged.
As of 05:55 ET, the Dow futures had risen by 102 points, or 0.3%, the S&P 500 futures added 22 points, or 0.5%, and the Nasdaq futures climbed by 107 points, or 0.7%.
The Federal Open Market Committee of the U.S. central bank decided to keep the federal funds rate within the target range of 5.25% to 5.50%. Chair Powell emphasized that the journey to reduce inflation to the 2% target is still ongoing.
Following the Fed’s announcement, the benchmark index increased by 1.1%, while the Dow and the tech-heavy Nasdaq rose by 0.7% and 1.6%, respectively. Global markets showed a similar upward trend, suggesting increased investor confidence that the Fed has concluded its rate hikes for the year.
In other financial news, the U.S. dollar weakened against a range of currencies, while the price of Bitcoin also fluctuated.
2. Powell Advocates for Cautious Approach
The Fed’s decision to maintain elevated borrowing costs, unchanged for over two decades, was generally welcomed by markets fatigued by extensive rate increases. However, during a closely watched press conference, Powell mentioned that officials are still evaluating whether further increases are necessary.
He highlighted the need for a careful approach moving forward, stating that current monetary policy is at a "restrictive" level. Powell’s remarks drew attention, particularly after recent strong economic data raised concerns of simmering inflation.
Despite these concerns, Powell expressed optimism that inflation would continue to decline, albeit in a fluctuating pattern. His comments underscored the Fed’s challenge of managing price stability without harming economic growth.
3. Apple Earnings on the Horizon
All eyes are on Apple as the company prepares to announce its earnings for the September quarter later on Thursday. Despite a strong year for the stock, which has risen over 30%, its fiscal fourth-quarter sales are projected at $89.28 billion, a decline of about 1% from the same period last year and the fourth consecutive quarterly decrease.
Analysts have indicated potential challenges ahead, particularly with a slowdown in demand from China and disappointing consumer spending. Experts at Barclays have cautioned that Apple’s guidance for the upcoming quarter, typically its most lucrative due to holiday shopping, may fall short of expectations.
4. Shell Expands Share Buyback Program
Shares of Shell experienced an uptick in early trading after the oil company announced an increase in its share buyback program to $3.5 billion over the next three months, up from $2.7 billion in the previous quarter.
The company maintained its dividend at $0.331 per share, despite a performance that its CEO described as "strong." Shell’s adjusted earnings for the third quarter amounted to $6.2 billion, in line with market expectations, although this reflects a 34% decrease year-on-year. The company benefited from strong trading in its liquefied natural gas segment, which helped mitigate declines in energy prices and production.
5. Crude Prices Recover After Fed Announcement
Oil prices saw a rebound on Thursday, ending a three-day decline following the Fed’s decision to keep interest rates steady, which bolstered risk appetite in the markets.
As of 05:55 ET, West Texas Intermediate futures were trading 1.6% higher at $81.72 a barrel, while Brent crude rose 1.4% to $85.83 per barrel. Both benchmarks had recently fallen to multi-week lows, experiencing a drop of around 10% within October.
Market reactions to U.S. inventory data were mostly subdued, reporting a smaller-than-anticipated rise in oil inventories for the week ending October 27. Distillate stocks decreased slightly, while gasoline inventories saw a limited increase.