S&P 500 futures rise in volatile trading as investors weigh the Fed, better-than-expected GDP

U.S. stock futures rose in volatile trading Thursday as investors mulled over an update from the Federal Reserve on its rate hike plan and a better-than-expected fourth-quarter GDP report.

Futures tied to the Dow Jones Industrial Average added about 215 points, or 0.6%, in highly volatile trading, after earlier plunging nearly 500 points. S&P 500 futures rose 0.9%. Nasdaq 100 futures added 1.2%.

Netflix jumped more than 4% on news that Pershing’s Bill Ackman bought 3.1 million shares. Tesla was marginally higher in early morning trading after reporting quarterly earnings.

On the downside, McDonald’s shares fell 2.5% in premarket trading after the fast-food chain’s fourth-quarter earnings missed Wall Street expectations. Intel lost 3% despite a strong earnings report.

Fourth-quarter gross domestic product jumped 6.9% from the year prior, the Bureau of Economic Analysis reported Thursday. Economists surveyed by Dow Jones expected the economy grew at a 5.5% annualized pace in the final three months of 2021.

Thursday morning’s rocky trading comes a day after the Federal Open Market Committee strongly indicated the first interest rate hike since late 2018 could come as soon as March.

Chairman Jerome Powell rattled markets Wednesday saying the Fed has “quite a bit of room” to raise rates before negatively impacting employment.

“Yesterday’s FOMC decision and Powell’s presser was both positive and negative for markets, but in the end, it mostly reinforced what we know: The Fed is serious about raising rates, that’s going to continue to … pressure the market multiple, and it will keep markets volatile,” Tom Essaye, founder of Sevens Report, said in a note.

Stocks fell sharply after the comment, and traders in the fed funds futures market now price in five quarter-percentage-point increases this year. The benchmark 10-year Treasury yield climbed above 1.8% following his remarks.

Still, the Dow ended the day down 129 points, after gaining more than 500 points at one point, following the Fed update. The S&P 500 lost 0.2% and the Nasdaq Composite closed little changed.

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