U.S. stock index futures slightly rose on Wednesday, ahead of another expected sharp interest rate rise by the Federal Reserve and after Russian President Vladimir Putin escalated his war against Ukraine.
How are stock index futures trading
- S&P 500 futures ES00, +0.56% rose 15.8 points, or 0.4% to 3,888
- Dow Jones Industrial Average futures YM00, +0.49% gained 127 points, or 0.4% to 30,924
- Nasdaq 100 futures NQ00, +0.47% advanced 23.5 points, or 0.2% to 11,943
On Tuesday, the Dow Jones Industrial Average DJIA, -1.01% fell 313 points, or 1.01%, to 30706, the S&P 500 SPX, -1.13% declined 44 points, or 1.13%, to 3856, and the Nasdaq Composite COMP, -0.95% dropped 110 points, or 0.95%, to 11425.
What’s driving markets
U.S equities were on course for a muted open as traders expressed nervousness over tightening monetary policy and heightened geopolitical tensions in Europe.
“It is proving very difficult for equity markets to make progress this week with chunky official rate hikes in prospect,” wrote Ian Williams, strategist at Peel Hunt.
The Federal Reserve is expected to increase its policy interest rate by 75 basis points to a target rate of 3.0% to 3.25% when it delivers it decision at 2 pm Eastern. The central bank has swiftly raised borrowing costs from near zero earlier in the year as it strives to combat inflation that is currently 8.3%, near multi-decade highs.
“All eyes will be on the Federal Reserve’s latest inflation busting move today, as the price spiral continues to cause financial pain for consumers and companies…There are worries that inflation is becoming dangerously entrenched in the economy, threatening financial stability,” wrote Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
The sharp rise in interest rates over recent months — and the prospect of more to come — has sparked a sell-off in bonds and pushed benchmark government yields TMUBMUSD10Y, 3.552% to 11-year highs, a move that is further pressuring stocks, partly because it makes debt assets relatively more attractive. The S&P 500 index is down 19.1% so far in 2022.
The Fed’s expected move comes after the Swedish central bank on Tuesday delivered a more-hawkish-than-expected 100 basis point rate hike and before an expected rate rise from the Bank of England on Thursday.
“Central banks are demonstrating greater resolve to fighting inflation, and increasingly willing to sacrifice growth to get there,” said Nathan Sheets, global chief economist at Citi.
Jim Cramer argued in a Tweet that providing Fed chair Jay Powell did no more than maintain his previously hawkish tone then the market could rally.
Still, suppressing sentiment on Wednesday was news that Russian president Vladimir Putin had called for a partial military mobilization of the country to prosecute his attack on Ukraine. The announcement, which included threats against the West, raised fears of a further escalation in the conflict.
Energy prices rose in response, with U.S. WTI crude futures CL.1, +1.44% up 1.7% to $85.89 a barrel and the ICE Dutch TTF natural gas futures, the continent’s benchmark, up 5% to 204 euros per megawatt hour. The euro EURUSD, -0.56% fell 0.6% to $0.9907, pushing the dollar index back near its 20-year peak.
Companies in focus
- Shares of General Mills Inc. GIS, -0.55% rose 2% in premarket trading Wednesday, after the branded consumer foods company, which brands include Cheerios, Betty Crocker and Häagen-Dazs, reported fiscal first-quarter profit that rose above expectations and raised its full-year outlook.
- Shares of Glatfelter Corp. GLT, +2.41% plunged 10.7% in premarket trading Wednesday, after the supplier of engineered materials said it suspended its quarterly dividend, as part of a “reprioritization” of capital as it focuses its efforts on optimizing financial results.
- Shares of defense companies were higher after Russian President Vladimir Putin mobilized more troops to Ukraine in what’s seen as a major escalation of the Ukraine war. Lockheed Martin LMT, +0.97% was up 2%, Northrop Grumman rose 1.3% and Raytheon RTX, +0.24% up 1.2%,