U.S. stock index futures slipped on Thursday after a broad market rebound in the previous session, with investors looking ahead to Federal Reserve Chair Jerome Powell’s speech for clues on monetary policy tightening plans.
Wall Street’s main indexes climbed the most in about a month on Wednesday as bond yields retreated after a recent surge that was driven by expectations of hawkish central bank policies. Still, the benchmark S&P 500 remains nearly 8% away from its August peak and is down about 17% year-to-date.
Hawkish remarks from Fed officials and recent data signaling strength in the U.S. economy have pushed money markets to bet on an 80% chance that the Fed will hike interest rates by another 75 basis points at this month’s meeting.
Goldman Sachs, too, raised its policy rate forecast to a 75 basis point hike this month from 50 basis points previously.
Powell could also shape expectations about what is to come when he speaks on Thursday, in what are likely to be his final public comments before this month’s policy meeting. He is scheduled to speak at 9:10 a.m. ET.
“There is a tug of war between needing to crush inflation but also the economy is slowing down,” said Willem Sels, global CIO, private banking & wealth management, HSBC.
“You’ll see lots of ups and downs as the market assesses the interest rate and growth outlook. Sometimes these things offset each other and that’s why we’re looking for consolidation in markets with lots of volatility.”
Data showed the number of Americans filing new claims for unemployment benefits fell last week to a three-month low, underscoring the robustness of the labor market even as the Fed raises interest rates.
Concerns over a recession, stirred by aggressive central bank rate hikes and signs of economic slowdown in China and Europe have dented the appetite for risk assets globally this year.
The European Central Bank raised its key interest rates by an unprecedented 75 basis points on Thursday and signaled further hikes. That follows large rate hikes from the Bank of Canada and Reserve Bank of Australia earlier this week.
At 08:46 a.m. ET, Dow e-minis were down 21 points, or 0.07%, S&P 500 e-minis were down 7.75 points, or 0.19%, and Nasdaq 100 e-minis were down 43.75 points, or 0.36%.
GameStop Corp rose 4.2% in premarket trading after the video game retailer reported a smaller-than-expected quarterly loss.
American Eagle Outfitters Inc slumped 12.3% after the retailer missed second-quarter profit estimates and said it would pause quarterly dividend as it fortifies its finances against a hit from inflation.