S&P 500 Futures Slip As Rate Hike Worries Persist

💡 The S&P 500 futures slipped as investors remain concerned about future rate hikes.

The Federal Reserve delivered a hawkish surprise on Wednesday, signaling that interest rate cuts remain further away than markets had hoped. Fed Chair Jerome Powell told reporters that the central bank needs "greater confidence" that inflation is sustainably declining before it will consider easing policy.

The 10-year Treasury yield surged to 4.8% in the aftermath, its highest level since October 2023. $TLT fell sharply as bond traders repriced the timing of the first cut from March to June.

Market Reaction

The S&P 500 futures fell 0.5% to 3,900, while the Dow Jones Industrial Average dropped 0.4%. Investors are pricing in a higher probability of a 50-basis-point rate hike at the next Federal Open Market Committee meeting in June, based on the futures market.

Economic Data

The latest economic data showed that the US economy grew at a slower pace in the first quarter, with the GDP increasing by 2.6%. The slowdown in growth was attributed to weaker consumer spending and a decline in business investment.

What It Means for Investors