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On Thursday, U.S. stock index futures witnessed a slight upward trend. This came as investors were processing the Federal Reserve's projections. These projections showed fewer-than-expected interest rate cuts and higher inflation for the next year. The previous day, these factors had severely impacted Wall Street. The Fed, in its Wednesday announcement, now anticipates only two 25 basis point cuts next year. This is half a percentage point less than its September forecast. Additionally, it raised the inflation expectation for the first year of the new Trump administration. As a result, the three main U.S. stock indexes suffered their sharpest daily declines since August. Traders now expect just one quarter-point rate reduction by mid-2025 and less than two cuts in total by the end of the year. This is in contrast to last week's expectations of three rate cuts. The S&P 500 hit a one-month low on Wednesday as investors adjusted their risk exposure to account for the impact of higher borrowing costs in 2025. Meanwhile, the Dow dropped for the tenth consecutive session, marking its longest streak of losses since 1974. Dow e-minis were up 124 points, or 0.3%, while S&P 500 E-minis were up 21.3 points, or 0.4%, and Nasdaq 100 E-minis were up 58.5 points, or 0.3%. The hawkish shift from the Fed occurred just three months after the U.S. central bank initiated its monetary easing cycle with a larger-than-usual 50 basis point interest rate cut. This cut had initially spurred risk appetite and helped push Wall Street to record levels. Since then, improving U.S. economic data and the prospects of higher inflation under Donald Trump's second U.S. presidential term have had an impact on the Fed's view. Chris Weston, the head of research at Pepperstone, stated, "If the Fed is holding off on a belief that we're seeing an end to disinflation, then equity faces renewed headwinds and drawdown." Stocks generally regained some ground in premarket trading after the sharp losses on Wednesday. Megacap Tesla and Nvidia each firmed by about 2%. In corporate news, Micron slumped 14% after its forecast of quarterly revenue and profit fell below estimates. SentinelOne gained around 4% as Jefferies upgraded the cybersecurity firm's shares from "hold" to "buy".

Fed's Projections Impact U.S. Stock Index Futures

Impact on Dow and S&P 500

The Dow's consecutive ten-session drop is a significant development. It shows the extent to which the Fed's decisions are affecting the market. The S&P 500's one-month low also indicates the volatility and uncertainty. These indexes have long been indicators of the overall health of the U.S. economy. The recent changes in the Fed's projections have led to sharp fluctuations in these indices. Investors are closely watching these trends as they try to make sense of the market's direction.The hawkish shift from the Fed has had a direct impact on these major stock indexes. It has created a sense of uncertainty among investors. They are now reevaluating their investment strategies in light of the new economic outlook. The Dow's performance is particularly noteworthy as it has not seen such a prolonged losing streak in decades. This highlights the importance of the Fed's actions in shaping the market.

Corporate News and Its Effects

Micron's 14% slump in share price after missing revenue and profit estimates is a clear example of how corporate performance can affect the market. Investors are quick to react to such news, especially when it comes to major companies like Micron. The sell-off in Micron's stock shows the sensitivity of the market to earnings reports.On the other hand, SentinelOne's gain of about 4% after being upgraded by Jefferies is a positive sign. It demonstrates that some companies are able to benefit from positive analyst actions. Such upgrades can boost investor confidence and lead to an increase in share prices. This shows that not all companies are negatively affected by the overall market conditions.In conclusion, the Fed's projections and the resulting market movements have had a wide-ranging impact. From the Dow and S&P 500 to individual companies like Micron and SentinelOne, the effects are being felt across the board. Investors are navigating these changes with caution, as the market remains volatile. The future direction of the U.S. stock market will depend on a variety of factors, including the Fed's continued actions and the performance of the economy.