Stock futures rose after the Federal Reserve raised its benchmark rate by a quarter percentage point, a move that had earlier prompted a sell-off in equities, according to CNBC.
Key facts
- The Federal Reserve raised the overnight funds rate by a quarter percentage point.
- The rate hike was described as a widely anticipated move.
- The Fed signaled another hike could come this year.
- The decision spurred a market sell-off before futures rose.
- Reporting is from CNBC.
Stock futures moved higher after the Federal Reserve’s latest interest rate decision, which had initially triggered a sell-off in equities, according to CNBC.
In what CNBC described as a widely anticipated move, the Fed raised the overnight funds rate by a quarter percentage point. The overnight funds rate is the benchmark that influences borrowing costs across the economy, from credit cards to business loans.
Alongside the increase, the central bank signaled that another hike could come later this year, according to CNBC. That guidance points to the possibility of further tightening as policymakers continue to manage economic conditions.
The rate decision spurred a market sell-off, CNBC reported, before stock futures subsequently rose. Futures reflect investor expectations for how markets will open in the next session, and their rebound suggested some recovery in sentiment following the initial reaction.
CNBC did not provide additional detail in the available source text on the size of the market moves or the specific indexes affected.
Why it matters
Interest rate decisions by the Federal Reserve directly affect borrowing costs for households and businesses, and they often move stock markets sharply. The signal of a possible additional hike this year suggests investors may face continued uncertainty in the months ahead.
Frequently asked questions
How much did the Federal Reserve raise rates?
According to CNBC, the Fed raised the overnight funds rate by a quarter percentage point.
Could there be another rate hike this year?
Yes. CNBC reported that the Fed signaled another hike could come this year.
How did markets react to the decision?
The rate hike spurred a market sell-off, after which stock futures rose, according to CNBC.