Stock futures are flat ahead of the Federal Reserve’s expected rate hike

I wish the Fed would just hike more and get it over with, says Ed Yardeni

Stock futures were flat on Tuesday night as traders look ahead to Wednesday’s announcement of a rate hike by the Federal Reserve.

Dow Jones Industrial Average futures rose 12 points, or 0.04%. S&P 500 and Nasdaq 100 futures rose 0.07% and 0.07%, respectively.

Stocks fell on Tuesday on the first day of the Federal Open Market Committee meeting. The Dow Jones Industrial Average fell 313.45 points, or 1.01%. The S&P 500 and Nasdaq Composite fell 1.13% and 0.95%, respectively.

Crops also jumped on Tuesday. The 2-year U.S. Treasury yield rose as high as 3.99%, the highest level since 2007. The 10-year Treasury yield briefly touched 3.6%, the highest since 2011.

Investors expect the central bank to deliver its third consecutive interest rate increase of 0.75 percentage points on Wednesday to curb high inflation. A higher-than-expected consumer price index reading in August and hawkish comments about interest rate hikes from Fed leaders have weighed on stocks, with more pressure likely ahead as the central bank continues to fight inflation.

“We’ll never really know if the stock market’s low for the year is in without successfully testing the June lows,” John Lynch, chief investment officer at Comerica Wealth Management, said in a Tuesday note. “To be sure, the recent technical weakness in share prices must now contend with the resolve of monetary policymakers in their fight against inflation.”

He added that the third-quarter earnings season could also provide headwinds for stock prices if they show further margin erosion for US companies.

Investors will also look for earnings from Lennar, KB Homes, General Mills and Steelcase Wednesday. Existing home sales will also be released on Wednesday morning.

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