Wall Street appeared poised for a recovery Wednesday following Tuesday’s big drop, as investors unhappy that the Federal Reserve did not lower rates more aggressively grew optimistic that the central bank will continue to aid the turbulent financial markets.
On Tuesday, stocks plummeted after the Fed lowered the target fed funds rate by a quarter point, disappointing investors who hoped for a more aggressive move to boost the economy during the seize-up in credit and rise in home foreclosures. Investors were also unnerved that the central bank did not implement a larger cut in the discount rate — the rate the Fed charges banks — and did not telegraph further rate cuts in its statement.
But according to media reports, the Fed is actively considering all the tools at its disposal to pump more liquidity into the U.S. banking system. The Financial Times reported that the central bank could announce a move as soon as Wednesday.
After the Dow Jones industrial average’s 294-point plunge Tuesday, Dow futures on Wednesday rose 98, or 0.73 percent, to 13,548.
Standard & Poor’s 500 futures rose 11.40, or 0.77 percent, to 1,489.50. Nasdaq 100 index futures added 14.00, or 0.67 percent, to 2,104.00.
Light, sweet crude for January delivery fell 10 cents to $89.92 a barrel in premarket trading on the New York Mercantile Exchange.
Bond prices fell as investors appeared ready to return to stocks. In pre-market trading, the 10-year Treasury note’s yield, which moves opposite its price, rose to 4.06 from 3.97 percent late Tuesday.
The dollar fell against the euro and pound but fell versus the yen. Gold prices slipped.
Overseas, Japan’s Nikkei stock average closed down 0.70 percent, while Hong Kong’s Hang Seng index closed down 2.41 percent. Britain’s FTSE 100 fell 0.94 percent, Germany’s DAX index shed 0.57 percent, and France’s CAC-40 dropped 1.09 percent.