Thursday January 27th


S&P 500 futures inch higher in volatile trading as investors grapple with Fed tightening ahead

U.S. stock market index futures traded volatilely Thursday morning as investors mulled over an update from the Federal Reserve on its rate hike plan. Futures tied to the Dow were flat in highly volatile trading, after earlier plunging nearly 500 points. S&P 500 futures rose 0.3%. Nasdaq 100 futures added 0.7%. McDonald’s shares fell 1.8% in premarket trading after the fast-food chain’s fourth-quarter earnings missed Wall Street expectations. The company said higher costs weighed on profits. Intel lost 2.7% and Tesla was marginally lower in early morning trading despite strong earnings reports. On the upside, Netflix jumped more than 4% on news that Pershing’s Bill Ackman bought 3.1 million shares. A full slate of economic news is set for release Thursday morning, with fourth-quarter GDP, durable goods orders and weekly jobless claims due at 8:30 a.m. ET. Economists surveyed by Dow Jones expect the economy grew at a 5.5% annualized pace in the final three months of 2021. Jobless claims are expected to total 265,000 and durable goods are forecast to show a decline 0.6% in December. Thursday morning’s rocky trading comes a day after the Fed strongly indicated the first interest rate hike since late 2018 could come as soon as March. Chairman Jerome Powell rattled markets Wednesday saying the Fed has “quite a bit of room” to raise rates before negatively impacting employment. Stocks fell sharply after the comment, and traders in the fed funds futures market now price in five quarter-percentage-point increases this year. The benchmark 10-year Treasury yield climbed above 1.8% following his remarks. Still, the Dow ended the day down 129 points, after gaining more than 500 points at one point, following the Fed update. The S&P 500 lost 0.2% and the Nasdaq Composite was little changed, with a boost from Microsoft’s post-earnings gain. “While offering some clarity on how the Fed would begin the process of removing policy accommodation, the outcome of the meeting fell short in providing the needed guidance on the timing and magnitude of the shift in policy,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. Asia-Pacific markets broadly fell on Thursday as investors reacted to an overnight update from the U.S. Federal Reserve that indicated the central bank plans to raise interest rates as soon as March. Japan’s Nikkei 225 fell 3.11% to 26,170.30 while the Topix declined 2.61% to 1,842.44. In South Korea, the benchmark Kospi dropped 3.5% to 2,614.49. The Hang Seng index and the tech-focused Hang Seng Tech index in Hong Kong slipped 1.99% to 23,807 and 3.81% to 5,383.63, respectively. Chinese mainland shares also declined: The Shanghai Composite slipped 1.78% to 3,394.25, and the Shenzhen component fell 2.77% to 13,398.84. Oil traded at a seven-year high of about $90 a barrel on Thursday as the Ukraine crisis supported prices despite signs that the U.S. Federal Reserve will tighten monetary policy. Brent crude futures were up 85 cents, or 0.94%, to trade at $90.80 per barrel. U.S. West Texas Intermediate (WTI) crude futures advanced 79 cents, or 0.9%, to trade at $88.07 per barrel. Gold held steady on Thursday following a sharp drop in the last session, as safe-haven demand driven by concerns over Ukraine countered gains in the U.S. dollar and Treasury yields as the Federal Reserve signaled interest rate hikes starting in March. Spot gold was unchanged at $1,816.41 per ounce by 0324 GMT, after closing 1.6% lower on Wednesday in its worst session since Nov. 22. U.S. gold futures fell 0.7% to $1,816.20.