Stock futures slide; Fed hikes rates by 50 basis points to curb inflation

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Powell says Fed won’t move more aggressively

The U.S. Federal Reserve raised interest rates by 50 basis points on Wednesday, and trimmed other pandemic-era stimulus measures, ramping up its attack on surging inflation and promising to keep up the pressure as Americans continue confronting higher prices.

The decision, announced at the conclusion of a two-day meeting of the Federal Open Market Committee (FOMC), lift the central bank’s benchmark interest rate to a range of 0.75% – 1%. It is the first time the Fed has raised rates by at least half a percentage point since 2000.

The central bank also said it will start trimming its Treasuries and mortgage-backed securities portfolio from June 1.

“Inflation is much too high. We understand the hardship it is causing, and we are moving expeditiously to bring it back down,” Fed Chairman Jerome Powell said at a news conference after the meeting.

“We have both the tools we need and the resolve that it will take to restore price stability on behalf of American families and businesses,” he added.

However, Powell said that the Fed is currently not “actively” considering a future rate hike of 75 bps, but further 50 bps rate hikes remain on the table at the next couple of meetings.

Stocks poised to open lower

Stock futures pointed to a lower opening for U.S. stocks on Thursday as traders turned cautious after Federal Reserve hiked its benchmark interest rate by 50 basis points but indicated it wouldn’t move more aggressively.

As of 5:55 a.m. ET, futures linked to the blue-chip Dow were marked 149 points, or 0.44% lower to 33,820.

S&P 500 futures dropped 27.5 points, or 0.64% to 4,267.75 while the tech-heavy Nasdaq 100 futures gave away 110 points, or 0.81% to 13,421.

On Wednesday, the Dow rallied 932.27 points, or 2.81% to end the session at 34,061.06. The S&P 500 gained 124.69 points, or 2.99% to finish at 4,300.17 while the Nasdaq Composite surged 401.10 points, or 3.19% to close at 12,964.86.

Elon Musk confirms a fresh $7.1 billion in funding for his Twitter deal

Elon Musk has secured an additional $7.1 billion in fresh financing to boost his proposed $44 billion takeover of Twitter (NYSE: TWTR).

According to a document Musk filed with the U.S. Securities and Exchange Commission on Wednesday, one of the backers is Saudi Arabia’s Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud.

He is a current Twitter shareholder and has pledged to commit $1.9 billion worth of shares to support the deal.

Cryptocurrency exchange Binance and Oracle (NYSE: ORCL) co-founder Larry Ellison are also listed as backers, the former having committing $500 million.

Other backers mentioned in the filing include Fidelity, Brookfield and Sequoia Capital.

Last month, Twitter’s board of directors agreed to a deal with Musk to take the company private for $54.20 a share, or $44 billion.

As of writing, Twitter shares were indicated $1.09, or 2.22% higher to $50.15 apiece in the premarket trading session.

 

 

 

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