U.S. stock futures were mixed Thursday after tech stocks saw their worst pounding in months following the release of minutes from the last Federal Reserve rate-setting meeting, which showed even more nervousness toward inflation than traders had expected.
What’s happening
- Futures on the Dow Jones Industrial Average YM00, +0.24% rose 65 points, or 0.2%, to 36,358
- Futures on the S&P 500 ES00, +0.04% rose fractionally to 4,694
- Futures on the Nasdaq 100 fell 0.2%, or 32 points, to 15,735
On Wednesday, the Dow industrials DJIA, -1.07% fell 392 points, or 1.1%, while the S&P 500 SPX, -1.94% dropped 1.9% and the Nasdaq Composite COMP, -3.34% skidded 3.3%. For the Nasdaq, it was the worst one-day percentage drop since Feb. 25.
What’s driving markets
Markets were rocked by the release of minutes from the Federal Open Market Committee meeting in mid-December, which showed officials not only talked about quicker and more frequent interest-rate hikes but also about a more aggressive wind down of its $8.9 trillion balance sheet than the last time it reduced it.
“Clearly, the Fed is going to raise rates. The Fed is going to normalize the portfolio,” said former U.S. Treasury Secretary Steven Mnuchin, on Fox Business Network. “It’s just how quick or how fast they do it. And, look, I think, 18 months from now, we will be sitting with 3% 10-year Treasury.”
The yield on the 10-year Treasury TMUBMUSD10Y, 1.730% was 1.74% early on Thursday.
Growth stocks suffered more pain. The ARK Innovation ETF ARKK, -7.09%, a proxy for highly speculative tech companies, slumped over 7% on Wednesday.
“Growth companies had been the main beneficiaries of extraordinarily low real and nominal interest rates, which pushed valuations to elevated levels. As the Fed begins to normalize policy, it’s logical that these stocks will face the strongest headwinds, similar to what we saw on Wednesday. Within the U.S. equity market, we continue to have a preference for value stocks over growth stocks,” said Mark Haefele, chief investment officer of global wealth management at UBS.
There’s a busy slate of economic releases, as well as speeches from two regional Fed presidents, though traders may use the session to position for the key jobs report due on Friday.
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