Futures tied to Wall Street’s major indexes fluctuated in pre-market trading Thursday after a turbulent previous session that saw stocks reverse gains into the close after the Federal Reserve signaled interest rate hikes could come as soon as March.
The central bank held rates at near zero following a two-day policy meeting that concluded on Wednesday, citing plans to halt pandemic-era policy of asset purchases first. The Federal Open Market Committee, however, reaffirmed it will wrap up the process in early March, suggesting the first rate hike could come in six weeks.
Investors had been anticipating clarity from the Fed on measures it would take to mitigate inflation leading up to Wednesday’s statement, with uncertainty around the pace and extent of policy change weighing on markets since the start of the new year.
“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,” Charlie Ripley, senior investment strategist for Allianz Investment Management said in a note. “Today’s meeting has market participants fully convinced that a March hike is certain, but with Chairman Powell not making any timing commitments, the door is slightly open for a slower moving Fed.”
While questions around when — and how profoundly — short-term borrowing costs will be increased, the Federal Open Market Committee unanimously agreed that “it will soon be appropriate to raise the target range for the federal funds rate,” with remarks from Federal Reserve Chair Jerome Powell signaling the first increase will happen on March 16, after the central bank’s next scheduled meeting.
“I would say that the committee is of a mind to raise the federal funds rate at the March meeting, assuming conditions are appropriate for doing so,” Powell said in a press conference.“I don’t think it’s possible to say exactly how this is going to go, and we’re going to need to be, as I’ve mentioned, nimble about this.”
JPMorgan Chief U.S. Economist Michael Feroli said Powell’s comments were “arguably the most hawkish he’s made as Fed Chair.”
Powell deflected questions about whether a 50 basis point hike was on the table, including one posed by Yahoo Finance’s Brian Cheung about whether hikes would be gradual, but Powell indicated that the central bank’s moves could differ in tempo from when it began raising rates in 2015 due to the notably stronger economy and labor market and inflation running hot.
“While remaining noncommittal, Powell clearly wanted to indicate that hiking at consecutive meetings was a possibility, a risk we’ve also been flagging,” Feroli said.
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8:30 a.m. ET: Q4 economic growth better than expected
The Bureau of Economic Analysis released its first estimate of fourth-quarter GDP on Thursday. U.S. economy expanded at 6.9% annualized rate in Q4, 5.5% expected.
GDP ramped up in the final months of 2021, with still-solid consumer spending helping stoke growth and offset early negative impacts from the Omicron variant’s spread.
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8:30 a.m. ET: New weekly jobless claims turn down
The Labor Department reported that another 260,000 individuals filed new claims for the week ending Jan. 22, slightly lower than the expected 265,000.
First-time unemployment filings ticked lower last week after notching a three-month high in the previous reading amid renewed virus-related disruptions.
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7:00 a.m. ET: Southwest Airlines takes flight with first quarterly profit in two years
Fourth quarter results from Southwest Airlines Co (LUV) reflected the Texas-based carrier notched its first quarterly profit in two years in the last three months of 2021, buoyed by holiday travel before the Omicron outbreak. The company also said it expects to be profitable in 2022.
Southwest, however, anticipates a loss in the current quarter through March due to repressed revenue gains and increased costs related to disruptions from Omicron. The airline expects to be profitable in the remaining three quarters of the year.
“With COVID-19 cases trending downward, the worst appears to be behind us,” incoming CEO Bob Jordan said. Jordan is expected to assume his post as the company’s sixth chief executive next month.
Shares of Southwest were mostly flat in pre-market trading at $43.77 a piece.
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7:00 a.m.: Futures on all three major indexes seesaw ahead of open
Here’s how stock futures fared in pre-market trading Thursday morning:
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S&P 500 futures (ES=F): +9.75 points (+0.22%), to 4,351.25
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Dow futures (YM=F): +39.00 points (+0.11%), to 34,094.00
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Nasdaq futures (NQ=F): +61.00 points (+0.43%) to 14,219.50
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Crude (CL=F): +$0.89 (+1.02%) to $88.24 a barrel
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Gold (GC=F): -$18.90 (-1.03%) to $1,810.80 per ounce
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10-year Treasury (^TNX): +0.00 bps to yield 1.8480%
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6:00 p.m. ET Wednesday: Stock futures crawl forward as investors mull Fed comments
Here were the main moves in post-market trading ahead of the overnight session:
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S&P 500 futures (ES=F): +8.25 points (+0.19%), to 4,349.75
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Dow futures (YM=F): +31.00 points (+0.09%), to 34,086.00
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Nasdaq futures (NQ=F): +44.00 points (+0.31%) to 14,202.50
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Crude (CL=F): +$0.23 (+0.26%) to $87.12 a barrel
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Gold (GC=F): -$10.80 (-0.59%) to $1,818.90 per ounce
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10-year Treasury (^TNX): +6.5 bps to yield 1.8480%
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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