Stock futures unchanged ahead of key Fed decision

A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, December 8, 2021.

Brendan McDermid | Reuters

U.S. stock futures were steady in overnight trading on Tuesday as investors braced for the much-anticipated Federal Reserve decision on Wednesday.

Dow futures rose 15 points. S&P 500 futures were flat and Nasdaq 100 futures were up 0.03%.

On Tuesday, key averages have dropped, exacerbated by sales of software names like Microsoft and Adobe. The Dow Jones Industrial Average lost 106 points. The S&P 500 fell 0.75%.

The tech-focused Nasdaq Composite was a relative underperformer, down 1.1% from Facebook’s parent company Meta . Platform, Amazon, Apple, Netflix and Google-parent Alphabet all closed lower.

Also hurting sentiment on Tuesday was the hotter-than-expected inflation readings for November producer price index showed a year-over-year increase of 9.6%, the fastest rate on record. According to Dow Jones, this is higher than the 9.2% expected by economists. The index was up 0.8% month-on-month, above expectations of 0.5%.

The Fed will wrap up its two-day policy meeting on Wednesday, and the public will hear from central bank Chairman Jerome Powell at a press conference at 2:30 p.m. ET.

The Fed is grappling with 39-year high inflation and the central bank is expected to announce an accelerated cut in its bond-buying program, introduced during the pandemic to support the economy. economy.

This sets the stage for a drastic policy change that should clear the way for the first rate hike next year.

A survey by CNBC Fed predicts the Fed will double its rate of increase to $30 billion at its December meeting, which will near the end of $120 billion in monthly asset purchases in March. The central bank will then raise interest rates. rate three times in each of the next two years, starting in June 2022, survey respondents predict.

Jim Paulsen, chief executive officer, said: “While the chairman is unlikely to recommend any specific time frame for when deposit rates will begin to rise, he will probably determine acknowledged that some members wanted to move faster than previously announced in raising interest rates”. Investment strategist for Leuthold Group.

“I don’t expect the Fed to say a lot of things that the financial markets haven’t anticipated,” Paulsen added. “Some of the recent stock market volatility may ease after this two-day meeting and its press conference is finally over.”

While the Fed meeting is in focus, investors are also keeping an eye on the new variant of Covid’s omicron. World Health Organization about Tuesday warning The new Covid-19 omicron variant is spreading faster than any previous strain and is likely to occur in most countries around the world.

Retail sales data for November is scheduled to release at 8:30 a.m. ET on Wednesday. Economists polled by Dow Jones are expecting that retail sales rose 0.8 percent in November, compared with October’s 1.7 percent gain, according to the Commerce Department.


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