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Dow Futures Bounce After Stock Market’s Biggest Selloff in Months

Last Updated September 23, 2020 12:52 PM
Ben Brown
Last Updated September 23, 2020 12:52 PM

Dow Jones Industrial Average (DJIA) futures rose on Thursday after the stock market’s worst day in months. The recovery comes as traders search for nuance in the Federal Reserve’s landmark rate cut on Wednesday, the first in a decade.

Dow sell-off triggered by disappointing Fed policy

The Dow Jones ended Wednesday more than 300 points down in the worst session since May. Although the market got the rate cut it wanted, traders headed for the exit as they interpreted Powell’s cut as a one-time deal. 

Traders weren’t the only ones left disappointed. President Trump slammed Powell on Twitter saying he “let us down” by not pursuing a string of rate cuts. 

Stock market recovers as Fed clarifies stance

Thursday’s mild recovery in the Dow comes after Powell later clarified his comments, leaving the door open for a future cycle of cuts. He explained:

“I didn’t say it’s just one or anything like that.”

Dow Futures
Dow futures sparked a recovery on Thursday after Fed chairman Powell left the door open for future rate cuts. Source: Yahoo Finance

The phrase was enough to soften the plunge and spark a small bounce this morning. At 7.37 am ET, Dow futures were up 31 points at 26,886. But investors are left confused. As Mark Cabana of Bank of America Merrill Lynch told CNBC :

“It was a very confusing and muddled message, and I don’t think that Powell delivered clear direction for what the near term path of additional Fed easing will be, and I think that’s why the market reacted negatively.”

It’s clear the market and the president want lower rates to stimulate the economy.