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Stock futures rise as Fed hints possible rate hike in 2026; Nikkei hits 71,000 for the first time
U.S. stock futures edged higher Wednesday night after the Federal Reserve signaled a potential rate hike later in 2026. S&P 500 and Nasdaq 100 futures rose 0.2% and 0.4% respectively, while Dow futures added 73 points. The moves followed the Fed's first meeting under new Chair Kevin Warsh, where the central bank held the benchmark rate steady at 3.5%-3.75%. The Fed’s updated "dot plot" showed several officials now anticipate a rate increase this year, with the median year-end rate estimate rising to 3.8% from March’s 3.4%, implying at least one hike. Warsh complicated forecasts by abstaining from submitting his own rate projection. Markets reacted negatively: the Dow fell 507 points (0.98%) after hitting an intraday record, the S&P 500 dropped 1.21%, and the Nasdaq lost 1.34%. Bond yields surged, with the two-year Treasury yield hitting 4.22%. Analysts attributed the selloff to the hawkish shift. Carson Group’s Sonu Varghese noted that elevated inflation makes the stance understandable but the committee remains divided, with only half penciling in hikes. Jefferies’ David Zervos said "the market doesn't like regime change." Meanwhile, Asia-Pacific markets opened broadly higher: South Korea’s Kospi rose 0.89% (SK Hynix hit a record), Japan’s Nikkei 225 gained 1.35% to top 71,000 for the first time, while Hong Kong’s Hang Seng futures pointed lower. Traders now await earnings from Accenture and Kroger, May’s leading indicators, June’s Philadelphia Fed Index, and initial jobless claims.