February 5, 2023

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Stock futures are flat after a volatile session following the latest Fed rate hike

Stock futures are flat after a volatile session following the latest Fed rate hike

Stock futures were muted Thursday morning after losses incurred during the daily trading session after the Federal Reserve raised interest rates again and signaled that there is no pivot or rate cut any time soon.

Futures related to the Dow Jones Industrial Average rose 9 points, or 0.03%. S&P 500 and Nasdaq 100 futures were almost flat.

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Traders had expected a 0.75 percentage point increase in the central bank rate and initially read the Fed’s statement as bearish, sending stocks higher.

These gains were reversed when Federal Reserve Chairman Jerome Powell said it was “too early” to talk about a pause in rate hikes and that the final interest rate would likely be higher than previously reported.

Traders react as Federal Reserve Chairman Jerome Powell speaks on a screen on the floor of the New York Stock Exchange (NYSE) in New York City, November 2, 2022.

Brendan McDermid | Reuters

“We still have some ways to go and the data from our last meeting suggests that the final level of interest rates will be higher than previously expected,” he said.

The Dow Jones Industrial Average ended Wednesday’s trading session 416 points lower, or 1.3% lower, trimming its significant rebound in October. The S&P 500 is down 2% and the Nasdaq Composite is down 2.8%.

Markets will likely continue to swing until it becomes clear that inflation has subsided and that the Fed has stopped pushing rates higher. Any data showing that the US economy is not slowing down as the tightening central bank policy is likely to affect stocks.

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The next important report is the October non-farm payroll, due for release on Friday.

“You get a good job number, in other words a good unemployment rate that doesn’t go up, the market is in a lot of trouble,” Jay Adami, director of advocacy for advisors at the Private Advisor Group, said on CNBC. Quick money.”