Nasdaq, S&P, Dow Futures and Yields Fall on Fed’s Big Day
Stock index futures were lower on Wednesday as investors braced for the Fed’s decision and director Jay Powell’s press conference.
S&P Futures (SPX) -0.4%Nasdaq 100 futures (NDX:IND) -0.4% and Dow future (INDIA) -0.5% fell after a risk-on rally in the previous session.
“After a very positive January, today early February marks three important days for markets that are likely to set the decisive tone for the weeks ahead,” wrote Deutsche Bank’s Jim Reid.
“The last time we held a big central bank meeting like this in December, the rate hike itself was as expected, but the hawkish rhetoric that came with them,” Reid said. led to a massive sell-off.” “However, the mood going into this round is much more upbeat, with the S&P 500 closing at a two-month high after US Employment Costs Index numbers showed lower labor costs. than expected.”
The market is pricing it almost certainly that the FOMC will rate cut by 25 basis points This afternoon.
The bigger question is whether this will be the last rally in the cycle. With the change coming late on Tuesday, traders are bracing for a one-of-a-kind announcement.
Ian Shepherdson of Pantheon Macro said today’s rally may be the last, but the Fed won’t give a clear signal on that.
Shepherdson added: “A retreat from the Fed’s hawks is unlikely; that will have to wait until the March meeting, when the Fed will see two more rounds of key inflation and growth data. “.
“In short, we think the Fed will soon have no choice but to retract its relentless hawkish message.”
There will be more economic data to look at before the Fed releases its statement, with a big focus on the labor market.
From the Fed’s perspective, the December JOLTS numbers, released shortly after the start of trading, are likely to attract the most interest given the strength of the still-tough labor market. Economists expect job openings to drop to 10.25M.
“The survey response rate for this (JOLTS) data has dropped, putting the quality in question,” said Paul Donovan of UBS. “The number of vacancies does not report actual vacancies, only vacancies advertised externally. Vacancies are very high, indicating much of the cause of the increase in ‘vacancy’. use’ after the pandemic is because people change companies.”
Before the alarm, ADP released January private payrolls figures, with consensus on an increase of 178 thousand, down from 235 thousand.
After initiating trading, two measures of production arrive. The S&P Global Manufacturing PMI for January is forecast to be steady at 46.8. The January ISM index is expected to drop to 48.
Among active stocks, AMD (AMD) increase after income. Superman (META) and Pinterest (pin code) fall into sympathy with Snap (SNAP) after weak earnings and later guidance.