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U.S. stock futures on Thursday were mixed following Federal Reserve Chair Jerome Powell’s press conference that suggested the central bank was planning to make several interest-rate hikes this year.
What’s happening
-
Futures on the Dow Jones Industrial Average
YM00,
-0.31%
slipped 18 points to 34034 -
Futures on the S&P 500
ES00,
-0.30%
rose fractionally to 4343 -
Futures on the Nasdaq 100
NQ00,
-0.30%
rose 0.2%, or 29 points, to 14188
Stock futures were well off their overnight lows, when the S&P 500 contract traded as low as 4263.
On Wednesday, the Dow Jones Industrial Average
DJIA,
fell 130 points, or 0.38%, to 34168, the S&P 500
SPX,
declined 7 points, or 0.15%, to 4350, and the Nasdaq Composite
COMP,
gained 3 points, or 0.02%, to 13542.
What’s driving markets
While the statement from the Federal Open Market Committee issued Wednesday afternoon didn’t surprise investors, the tone of Powell’s comments did.
The central bank chief didn’t reject the notion that the Fed could hike at each of its meetings this year, and talked of the need to be “nimble.” He also said there was “quite a bit of room to raise rates without hurting jobs.”
Seema Shah, chief strategist at Principal Global Investors, called that remark about the ability to lift rates without hurting the jobs market a “real kick to market teeth.”
The yield on the 2-year Treasury
TMUBMUSD02Y,
at 1.036% five minutes before the Fed decision, vaulted up to 1.195% early Thursday.
Powell’s comment that his core PCE inflation forecast had increased by about 20 basis points since December equates to a roughly 30 basis point increase in projected Fed funds rate, said Lawrence Dyer, head of U.S. rates strategy at HSBC.
He said fed funds futures for the end of 2022 are up a bit more than that, which could mean that the yields could reverse in the next few days.
There’s more earnings on tap, with Apple
AAPL,
the major report coming after the close. Investors had a muted reaction to Tesla’s
TSLA,
report showing a stronger profit than forecast but cautious guidance on the supply-chain snags in microchips. Microchip equipment maker Lam Research
LRCX,
said supply-chain conditions worsened in late December.
