Nasdaq 1% Pre-Market, Dow Futures Up 300 Points: Three Reasons Why US Stocks Are Rebounding From Fed Jolt

US stock futures rallied before the opening bell on Thursday, September 17 as oil prices continued to drop, easing inflation concerns a day after the Federal Reserve raised interest rates and hinted more tightening further.

In this backdrop, US stock market is expected to rally today as Nasdaq futures advanced 1.06% or 306 points to 29,269.75, S&P 500 rose 0.8% or 60 points to 7,617, while Dow Jones climbed 0.73% or 375 points up at 51,882 by 4:26 am ET or 3:47 pm IST.  

With the Fed's rate hike decision now behind, investors are focusing on the outlook for interest rates, while its commitment to controlling inflation has eased concerns over rising prices.

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Here are three reasons why US stock market is expected trade higher today -

Slipping oil prices

Brent crude continued to drop on Thursday, slipping below $105 a barrel as signs of easing supply disruptions in the Middle East reduced some of the risk premium built into oil prices. West Texas Intermediate crude also weakened, trading near $101 a barrel, after both benchmarks fell sharply in the previous session.

The decline in oil prices come following reports that Saudi Arabia is working to restore around half the capacity of its damaged East-West pipeline within days, with full operations targeted in about six weeks. The pipeline, which runs across Saudi Arabia to its Red Sea coast, is particularly important because it offers an alternative route for exports that avoids the Strait of Hormuz.

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Treasury Yields Dip

The 10-year US Treasury yield dropped below 5%, primarily driven by falling energy price and inflation concerns. The yield on 10-year Treasuries declined three basis points to 4.99%. Lower yields are typically supportive for US stocks.

Easing Middle East Tensions

Follwoing the recent escalation of tensions between US and Iran, signs that supply disruptions may ease in the Middle East, resulting  pullback in oil prices. President Donald Trump is expected to meet with Persian Gulf leaders next week on the sidelines of the UN General Assembly in New York likely tto hold talks on the conflict, Axios reported.

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