Futures climb as hopes of a Fed pause gain steam

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The Federal Reserve raised rates by 25 basis points, as expected, on Wednesday but its policy statement no longer said “ongoing increases” would likely be appropriate.

The shift in the central bank’s tone relieved markets that have been roiled by concerns about a liquidity crisis in the banking sector since the failure of two U.S. regional lenders earlier this month.

At 4:33 a.m. ET, Dow e-minis were up 158 points, or 0.49%, S&P 500 e-minis were up 27.5 points, or 0.69%, and Nasdaq 100 e-minis were up 123.25 points, or 0.97%.

However, Wall Street’s main indexes closed sharply lower on Wednesday after Fed Chair Jerome Powell told a news conference that the central bank was still intent on fighting inflation while also monitoring the extent to which the recent bank failures had cooled demand and slowed lending.

There is a now an equal split between traders’ odds of the Fed pausing its rate hikes in May and of another 25 bps hike, with the likelihood of rate cuts soon after that.

While U.S. Treasury yields slipped on growing hopes of an end to the Fed’s tightening cycle, there was a 1%-3% increase in the prices of major growth stocks such as Apple Inc (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon.com (NASDAQ:AMZN).

Those pre-market gains helped boost futures for the tech-heavy Nasdaq.

Shares of troubled regional lender First Republic Bank (NYSE:FRC) rose 3.1% in premarket trade after slumping on Wednesday following Treasury Secretary Janet Yellen’s remark that there was no discussion on insuring all bank deposits.

Shares of PacWest Bancorp and Western Alliance (NYSE:WAL) Bancorp gained 4.7% and 6.0%, respectively.

On the economic data front, a reading due at 8:30 a.m. ET is expected to show a rise in jobless claims last week, hinting at some cooling in labor demand. Data on home sales is also expected later in the day.

Among other stocks, Coinbase (NASDAQ:COIN) Global Inc fell 10.8% after the U.S. Securities and Exchange Commission (SEC)threatened to sue the crypto exchange over some of its products.