(Financial Eye) – U.S. stock index futures steadied on Thursday after a sharp selloff on Wall Street in the previous session on worries about an economic downturn following the Federal Reserve’s promise to keep raising interest rates to tame inflation.
The three main indexes finished more than 1.7% down on Wednesday, with the Dow posting its lowest close since June 17. The Nasdaq and , respectively, ended at their lowest point since July 1 and June 30.
The U.S. central bank hiked interest rates by 75 basis points for a third straight time as largely anticipated, but forecast its policy rate rising at a faster pace and to a higher level than expected and the economy slowing to a crawl.
The Fed’s target policy rate is now at its highest level since 2008, and the new projections show it rising to the 4.25%-4.50% range by the end of this year.
Worries about the impact of aggressive interest rate hikes on the economy and corporate profits have left the benchmark S&P 500 less that 4% away from its mid-June low, its weakest point of the year.
“There’s capacity for equity markets to retest new lows,” said Laura Cooper, a senior investment strategist at BlackRock (NYSE:).
“We’ve seen it already in terms of repricing of valuation but I’d expect the next leg could come from earnings revisions, notably as the growth risks come through in terms of more downgrades ahead.”
The U.S. bond yield curve inverted further, amplifying concerns about a recession in the next one-to-two years. [US/]
Rate-sensitive bank stocks were mixed in premarket trading, but heavyweights such as Apple Inc (NASDAQ:), Tesla (NASDAQ:) Inc and Microsoft Corp (NASDAQ:) rose between 0.4% and 0.9% after tumbling in the previous session.
At 4:36 a.m. ET, were up 147 points, or 0.49%, were up 17.25 points, or 0.45%, and were up 48.75 points, or 0.42%.
Elsewhere, the yen rose sharply against the dollar after Japan intervened in the forex market for the first time since 1998 to shore up the battered currency.