U.S. stock futures were little changed Thursday evening after hawkish remarks from Federal Reserve Chair Jerome Powell hinting a half-point rate hike was likely next month sent all three major indexes tumbling during Thursday’s session.
Contracts on the S&P 500 dipped 0.03%, futures tied to the Dow Jones Industrial Average were 3 points lower, and Nasdaq futures ticked down 0.03% ahead of overnight trading. Meanwhile, Treasury yields continued their climb, with the 10-year U.S. benchmark at 2.92%, the highest level since December 2018.
Speaking at a panel hosted by the International Monetary Fund Thursday, Powell said a 50-basis point rate increase was “on the table” for May when the U.S. central bank holds its next policy-setting meeting. The Fed chair also reiterated that Fed officials were committed to “front-end loading” inflation-fighting efforts.
“We really are committed to using our tools to get 2% inflation back,” Powell said in remarks before European Central Bank President Christine Lagarde and other policymakers, referring to the Fed’s target for annual price increases.
“We’re definitely in the cards for a 50 basis point rate hike in the May meeting,” Capital2Market President Keith Bliss said on Yahoo Finance Live on Thursday (video above). “The market is pretty good at dictating, if not indicating, where this is going to go.”
With the headline Consumer Price Index at its highest level in four decades, the U.S. Federal Reserve has recently signaled aggressive monetary tightening is underway to rein in rising price levels despite warnings from experts that moving too quickly could result in an economic contraction.
“The big question is whether the earnings can really sustain this kind of a macro backdrop of slower growth and Fed policy,” Deutsche Bank Wealth Management Chief Investment Officer Deepak Puri said on Yahoo Finance Live earlier this week. “It seems certain companies can — historically that’s been the case. What’s different this time is really the trifecta, which is higher costs of capital, quantitative tightening, plus a lack of … a big fiscal stimulus.”
Despite worries from Wall Street over the next policy moves and the risks posed to traders, a readout of the Federal Reserve’s recently published Beige Book suggests Main Street sentiment remains positive overall.
Strategists at LPL Research said the Beige Book Barometer may provide a more accurate picture of the economic outlook than current consumer sentiment, which has been weak in the face of soaring inflation. Despite an economic slowdown in the first quarter, data out of Washington has come in better than consensus expectations in recent weeks.
“Looking at the Fed’s most recent Beige Book, local U.S. businesses remain resilient despite elevated uncertainty,” LPL Financial Asset Allocation Strategist Barry Gilbert said. “Inflation, COVID, and the conflict in Ukraine will keep uncertainty elevated in the near term, but if we can navigate these challenges we believe there are solid prospects of a pick-up in growth in the second half of the year.”
6:53 p.m. ET: Stock futures muted after hawkish Powell remarks sent indexes tumbling
Here’s where stocks were trading ahead of the overnight session on Thursday:
S&P 500 futures (ES=F): -1.50 (-0.03%) to 4,389
Dow futures (YM=F): -3.00 (-0.01%) to 34,706
Nasdaq futures (NQ=F): -4.75 (-0.03%) to 13,723.50
Crude (CL=F): -$0.03 (-0.3%) to $103.76 a barrel
Gold (GC=F): +$4.60 (+0.24%) to $1,952.80 per ounce
10-year Treasury (^TNX): +0.077 bps (+2.71%) to yield 2.9170%
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc