US pre-open: Futures in the red following Fed interest rate decision

Wall Street futures were in the red ahead of the bell on Thursday after the Federal Reserve Bank decided to hike interest rates by 0.75 points overnight.

As of 1230 BST, Dow Jones futures were down 0.15%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.22% and 0.56% lower, respectively.

The Dow closed 436.05 points higher on Wednesday after the Fed enacted its second 0.75 percentage point interest rate hike as part of an effort to ease rampant inflation without bringing about a recession.

The Federal Reserve's decision to raise its benchmark interest overnight borrowing rate up to a range of 2.25-2.5% was still drawing the majority of investor attention ahead of the opening bell, with its moves in June and July representing the bank's most stringent consecutive actions since it began using the overnight funds rate as its principal method of monetary policy back in the early 1990s.

AvaTrade's Naeem Aslam said: "The fact is the message is clear from Fed now, and that is they want to bring the inflation lower no what the cost is. Although, they are trying their best to avoid a recession. Jerome Powell, like Janet Yellen and President Biden, said that the US economy isn't in a recession. This is purely on the basis of the new definition of recession which doesn't define a recession as two consistent quarters of negative growth.

"The future message of any interest rate hike also needs to show consistency and coherent behavior among the Fed members. So far, market players do not expect that the next interest rate hike, which will be in September, will be 75 basis points. Traders expect the next interest rate hike to be around 50 basis points, and the one after that will be around 25 basis points. The important point here is that investors and traders would like to see the Fed assess the situation more carefully and not set the monetary policy on autopilot. Putting anything on autopilot could be extremely dangerous for the US economy."

Earnings were also firmly in focus before the start of trading, with Southwest Airlines, Stanley Black & Decker, Royal Caribbean, Carlyle Group, Merch & Co, Comcast, Hertz Global, Honeywell, MoneyGram, Pfizer, and MasterCard all scheduled to report before the opening bell.

Still to come, Amazon, Apple, Intel, and Eventbrite will all publish earnings after the close.

On the macro front, advance readings of Q2's GDP growth rate and July's PCE prices will be published at 1330 BST, as will weekly jobless claims data.

Reporting by Iain Gilbert at Sharecast.com