Nasdaq 100 and S&P 500: US Indices Slide as Fed’s Rate Cut Optimism Dims

Stock Futures Slide as Fed Optimism Fades

Stock futures pointed lower Thursday, erasing some of the prior session’s gains after the Federal Reserve signaled two rate cuts in 2025 but raised its inflation outlook. Dow Jones Industrial Average futures dropped 225 points (-0.5%), while S&P 500 and Nasdaq 100 futures declined 0.6% and 0.7%, respectively.

Investors are weighing the Fed’s stance against persistent inflation risks and geopolitical uncertainties, including the potential reintroduction of tariffs in April. Michael Green of Simplify Asset Management warned that volatility could extend beyond April 2 as markets adjust to shifting U.S. trade policies.

Tech Stocks Struggle as Tesla Extends Losses

Technology stocks faced renewed selling pressure in premarket trading. Tesla, already down nearly 20% in March, slipped another 1%, while Alphabet fell by a similar margin. The Technology Select Sector SPDR Fund (XLK) lost 0.6%, reflecting broader weakness in the sector.

Despite the Fed’s reassurance that tariffs may have only a transitory effect on inflation, traders remain skeptical. Fed Chair Jerome Powell’s comments echoed past statements downplaying inflationary risks, but investors are watching for signs that higher prices could persist.

Economic Data Provides Mixed Signals

The latest Philadelphia Fed manufacturing index showed factory activity slowing in March but still beating expectations, with a reading of 12.5 versus the estimated 10. Hiring intentions surged to their highest level since October 2022, suggesting continued labor market strength.

Meanwhile, jobless claims rose slightly last week to 223,000, but remained below expectations, indicating that layoffs remain contained. Continuing claims increased to 1.89 million, reflecting steady but manageable labor market conditions.

Darden Restaurants Jump Even After Revenue Miss

Darden Restaurants shares rallied more than 7% on the opening even after the company’s third-quarter revenue missed estimates. While earnings slightly exceeded expectations, sales at Olive Garden and LongHorn Steakhouse disappointed analysts. The company also narrowed its full-year earnings forecast, adding to investor concerns in the pre-market session.

Despite the recent pullback, Darden shares have gained more than 10% over the past six months, outpacing the broader market and maintaining a modest year-to-date gain.

Market Outlook

Traders are monitoring developments in trade policy and inflation trends as key drivers of near-term market sentiment. With tariffs potentially returning and the Fed hesitant to act before assessing their impact, uncertainty remains high. Upcoming economic reports and corporate earnings will be critical in shaping expectations for the second quarter.

More Information in our Economic Calendar.