December 6, 2022

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Stock futures jump ahead of Fed decision, oil extends drop

Stock futures jump ahead of Fed decision, oil extends drop

Stock futures jumped on Wednesday morning as traders await the Federal Reserve’s latest monetary policy decision and updated economic outlook later in the day. More positive developments regarding the future of talks between Russia and Ukraine also helped boost US and global stocks.

Contracts in the S&P 500, Dow and Nasdaq all rose more than 1% in pre-market trading. The moves built on Tuesday’s gains, when the S&P 500 closed more than 2% higher to shake off some of the volatility that has swept US stocks recently. Treasury yields stabilized after rising sharply, and the 10-year yield hovered above 2.1% to its highest level since 2019.

At least one Kremlin official reportedly spoke upbeat about discussions with Ukraine early Wednesday, helping provide a boost to stocks recently affected by geopolitical turmoil. Kremlin spokesman Dmitry Peskov suggested a proposal that Ukraine become a neutral country while retaining its armed forces “can be considered a certain type of compromise”. Bloomberg reported Wednesday.

Energy prices pared recent gains, and Central West Texas (WTI)CL = F.Crude oil futures briefly fell below $95 a barrel to fall further into a bear market. Earlier this week, US crude oil for the first time entered bear market territory, with prices down more than 20% from the recent closing highs set just a week ago. Brent crude, the international benchmark, has oscillated below $100 a barrel.

This week, investors were preparing to receive the Federal Reserve’s latest monetary policy decision, which is likely to show the first rate hike this year. Currently, the benchmark interest rate has been kept near zero since mid-2020, with the central bank using low rates and a series of other monetary policy tools to keep financial conditions smooth amid the pandemic. The Fed raised interest rates last time in 2018.

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Already, Federal Reserve Chairman Jerome Powell has told Congress in recent weeks that he will support a 25 basis point rate hike at the Fed’s March meeting. This increase would be in line with the size of the Fed’s typical increase for each meeting over the past two decades, and would begin the process of gradually tightening financial conditions to reduce demand and inflation. By choosing against a 50 basis point rate hike – which some market participants called for at the start of the year – the Fed is also likely to avoid shocking markets already reeling from Russia’s invasion of Ukraine.

More importantly, in addition to providing a decision on a rate hike, the Fed will also release an updated summary of economic outlook, or a “point chart,” showing what central bank officials think about where interest rates and growth in the economy are headed in the near term. To that end, many pundits expect to see the Fed raise its inflation and labor market expectations this year.

Core personal consumption expenditures (PCE) – or the Fed’s preferred measure of inflation excluding volatile food and energy prices – rose at a 6.1% annual rate in January. Since then, the latest publications on consumer and product price inflation have appeared They indicated a sharp rise in prices.

“The point chart should be increased given all the news we had between December and today,” Michael Kuchma, chief investment officer at Morgan Stanley Investment Management, told Yahoo Finance Live on Tuesday. “We have a strong labor market, higher inflation than expected. Oil prices, energy prices, commodity prices are much higher now than they were back then. It all indicates that the Fed needs to move forward, and they need to be in a point chart. So I think They’re going to be talking about the average, maybe five price hikes in 2022, and a couple more in 2023.”

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7:08 a.m. ET. Wednesday: A jump in stock futures

Here’s where the markets are trading on Wednesday morning:

  • S&P 500 futures contracts (ES = F.): +51.5 points (+1.21%) to 4313.50

  • Dow futures contractsYM = F.): +358.00 points (+1.07%) to 33890.00

  • Nasdaq futures contractsNQ = F.): +238.00 points (+1.77%) to 13,689.75 points

  • raw (CL = F.):- $0.38 (-0.39%) to $96.06 per barrel

  • gold (GC = F.): – $6.10 (-0.32%) to $1,923.60 per ounce

  • Treasury for 10 years (^ degeneration): +0.2 basis points to produce 2.162%

6:13 p.m. ET Tuesday: Stock futures mixed, Dow futures gain more than 250 points

Here’s where the stocks are trading Monday morning:

  • S&P 500 futures contracts (ES = F.): -3.5 points (-0.08%) to 4,258.50 points

  • Dow futures contractsYM = F.): -22 points (-0.07%) to 33,510.00

  • Nasdaq futures contractsNQ = F.): -1.5 points (-0.01%) to 13,450.25 points

NEW YORK, NY – MARCH 11: Traders work on the floor of the New York Stock Exchange (NYSE) on March 11, 2022 in New York City. The Dow Jones Industrial Average rose more than 200 points in morning trading on the final day of a volatile week for global markets. (Photo by Spencer Platt/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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