A trader works, as a screen broadcasts a news conference by U.S. Federal Reserve Chair Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 7, 2025.
Brendan McDermid | Reuters
Stock futures were slightly higher early Thursday on the heels of the Federal Reserve holding steady on rates as it highlighted rising inflation and unemployment risks.
S&P 500 futures traded 0.73% higher. Futures tied to the Dow Jones Industrial Average added 222 points, or 0.54%. Nasdaq-100 futures rose 1%.
The Federal Reserve kept its benchmark overnight borrowing rate at 4.25% to 4.5%, a move that was widely expected. The rate has remained in that range since the central bank’s December meeting, when it cut interest rates by a quarter percentage point.
“Uncertainty about the economic outlook has increased further,” the Fed wrote in its post-meeting statement. “The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.”
That said, Fed Chair Jerome Powell dismissed the idea of a “preemptive” rate cut to get ahead of any potential impacts from President Donald Trump’s tariffs, seeing that inflation is still “running above target.” “We actually don’t know what the right responses to the data will be until we see more data,” he said during a press conference Wednesday.
“The Federal Reserve is in a bind – with concerns about inflation and an economic slump, which will lead to higher unemployment, pulling them in two opposite directions,” said Chris Zaccarelli, Northlight Asset Management’s chief investment officer. “The markets are going to increasingly worry about a recession, and unless some trade deals are made before the tariff pause runs out, we are going to see markets drop again like they did in early April.”
The S&P 500 gyrated following the Fed decision before ultimately finishing 0.43% higher, supported by a more than 3% rise in Nvidia. The move in the artificial intelligence darling came after Bloomberg reported that the Trump administration is planning to end trade restrictions on chips. The tech-heavy Nasdaq Composite also gained 0.27%, while the blue-chip Dow Jones Industrial Average rose 0.7%.
Investors are now looking ahead to other economic reports due to be released on Thursday. Weekly jobless claims data is set to be released before the opening bell at 8:30 a.m. ET, while the New York Fed Survey of Consumer Expectations is slated for later in the day.
Meanwhile, this stacked earnings week continues Thursday, with energy name ConocoPhillips and media giant Warner Bros. Discovery scheduled to report before market open. Fellow legacy media company Paramount Global is set to release its earnings after market close, along with others like travel company Expedia.
In extended trading, shares of AppLovin jumped more than 13% in extended trading after the company topped Wall Street’s expectations with its latest quarterly results and announced that it’s agreed to sell its mobile gaming business. Arm Holdings, however, dropped more than 11% after the semiconductor name issued disappointing guidance.
Positioning momentum in U.S. stocks has stalled even with positive catalysts, Citi says
U.S. equity positioning may not be all that upbeat despite recent trade developments and quarterly results, according to Citi.
“De-escalating trade tensions and a better-than-expected earnings season have led to a period of stability for investor positioning. However, the uplift from bullish flows has been considerably restrained,” Chris Montagu, the firm’s global head of quantitative research, wrote in a note on Wednesday.
Montagu found that positioning momentum levels are actually close to neutral for both the S&P 500 and the Nasdaq Composite.
“Limited bullish flows were overshadowed by increasing short positioning, leading to a decline in positioning levels for the S&P,” he continued. “Nasdaq positioning edged higher, but neither index reflected a strong shift towards bullish positioning over the past week.”
— Sean Conlon
AppLovin, Arm among the stocks making moves after hours
Check out the stocks making big moves in extended trading on Wednesday:
- AppLovin – The AI-powered marketing platform saw shares rallying 13% in extended trading after the company reported stronger-than-expected quarterly results. AppLovin’s posted an EPS of $1.67, higher than an LSEG consensus estimate of $1.45 per share. Revenue of $1.48 billion also came in above expectations. The company also announced it’s selling its mobile gaming business to Tripledot Studios for consideration of $400 million in cash and an approximately 20% ownership stake in Tripledot common equity.
- Arm Holdings – U.S. traded shares of the chip designer slid 9% after the company’s guidance failed to impress Wall Street. Arm sees fiscal first-quarter adjusted earnings ranging from 30 cents to 38 cents a share, while FactSet consensus estimates sought 42 cents per share. Guidance on revenue for the period ranged from $1.00 billion to $1.10 billion, while estimates called for $1.10 billion. The outlook overshadowed beats on the top and bottom lines in the fiscal fourth quarter.
- Skyworks Solutions – The semiconductor stock dropped 4% even after the company reported stronger-than-expected earnings for the fiscal second quarter. Skyworks posted adjusted earnings of $1.24 per share on $953 million in revenue, above the $1.20 per share and $952 million in revenue that analysts surveyed by LSEG were expecting. The company also forecast upbeat earnings for the third quarter.
Read here for the full list.
— Sean Conlon
Stock futures open lower
U.S. stock futures traded down Wednesday night after the three major averages saw gains during the day’s regular session.
Just after 6 p.m. ET, S&P 500 futures moved 0.2% lower, as well as Nasdaq-100 futures. Futures tied to the Dow Jones Industrial Average dropped 85 points, or 0.2%.
— Sean Conlon
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