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U.S. stock futures pointed to a mixed start for Wall Street on Tuesday, as investors looked toward the start of a Federal Reserve meeting and kept an eye on omicron updates.
How are stock-index futures trading?
-
S&P 500 futures
ES00,
-0.24%
fell 0.2% to 4,651 -
Dow Jones Industrial Average futures
YM00,
+0.00%
were flat at 35,546 -
Nasdaq-100 futures
NQ00,
-0.65%
dropped 0.5% to 15,996
On Monday, the Dow Industrials
DJIA,
fell by 320.04 points, or 0.9%, at 35,650.95., the lowest closing value since Dec. 6. The S&P 500
SPX,
slid 43.05 points, or 0.9%, at 4,668.97, under the psychologically significant level of 4,700. The Nasdaq Composite Index
COMP,
fell 217.32 points, or 1.4%, at 15,413.28, the lowest closing value since Dec. 6.
What’s driving the markets?
Monday marked the biggest one-day point and percentage falls since Dec. 1 for the S&P 500 and Dow, as investors fretted over the fast spreading omicron variant of COVID and looked ahead to the kickoff of the last Fed meeting of the year.
Investors expect policy makers to announce a faster pace of tapering at the meeting’s conclusion on Wednesday due to higher inflation, with particular attention on the Fed’s latest economic projections and its rate expectations, laid out in the so-called dot plot.
See: 5 things to watch for when the Federal Reserve announces its policy decision Wednesday
“Front-end interest rates are pricing just under three rate hikes in 2022 – which would seemingly reflect an expectation that tapering of asset purchases is accelerated and that Fed “dots” will drift higher at Wednesday’s meeting,” said a team of Citi strategists led by Andrew Hollenhorst.
“However, equity prices at all-time highs and long-term real interest rates close to historic lows suggest the market continues to price a relatively benign scenario where inflation returns to target without significantly more restrictive monetary policy,” the strategists said in a note to clients.
Investors will get an update on producer price inflation, with November data due at 8:30 a.m. Eastern Time.
Investors may also want to see the Fed’s viewpoint on the fast-spreading omicron variant of COVID. Facing rising infections, California became the latest state to reimpose indoor mask mandates, which take effect on Wednesday. A study released Tuesday from Discovery, South Africa’s biggest health-insurance provider, showed that two shots of the Pfizer-BionTech vaccine offer 70% protection against hospitalizations, Bloomberg reported.
“The question this week is whether central banks perceive inflation or omicron to be the greater risk. The consensus view still appears to be that price pressures are driven by temporary factors that will largely correct over time but every month of inaction is a risk,” said Craig Erlam, senior market analyst at OANDA, in a note to clients.
The International Energy Agency on Wednesday cut its 2022 supply forecast from non-OPEC producers by 100,000 barrels a day and its demand forecast by the same amount, amid expectations a surge in coronavirus cases due to the omicron variant will weigh on the global recovery.
U.S. oil prices moved modestly lower, with January crude
CL00,
CLF22,
down 0.2% to $71.17 a barrel.
The yield on the 10-year Treasury note
TMUBMUSD10Y,
rose 1 basis point to 1.43%.
