Stock futures were sharply lower Thursday following the Federal Reserve’s latest policy update.
Futures tied to the Dow Jones Industrial Average fell 240 points, or 0.7%. S&P 500 futures dropped 1%, and Nasdaq 100 futures lost 1.3%.
On Tuesday, the Dow fell 142 points, while the S&P 500 declined 0.61% and the Nasdaq Composite dropped 0.76%.
The main indexes reacted negatively as investors digested the Federal Reserve’s latest comments following a lift to its overnight borrowing rate. The central bank said it would proceed mountain climbing rates through 2023 and projected a higher-than-expected terminal rate of 5.1%. With Wednesday’s half a percentage point hike, the targeted range for rates is currently 4.25% to 4.5%, which is the very best in 15 years.
“The Fed just put a roadblock in front of Santa’s sleigh,” said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs.
She also noted the tone of Fed Chair Jerome Powell, who in speech Wednesday afternoon sounded “strict” and clear that he “doesn’t have a plan to pause or take a reversal path.”
“It will be higher for longer and monetary policy goes to be more restrictive than thought,” Jablonski said. “The market goes to be handicapped by Fed policy for sometime longer. Though we just like the news and like seeing CPI prints just like the last one which led to a short-lived rally, that is going to present us some near-term volatility.”
Despite favorable improvements like modest growth, spending and production, Powell indicated he stays concerned job gains are too robust and the unemployment rate is just too good for the Fed’s fight against inflation.
Investors will get one other batch of economic data to digest Thursday. Retail sales, jobless claims and Philadelphia Fed manufacturing index are all due out at 8:30 a.m. ET.
