Stock futures rose Thursday evening to steady after a tech-driven selloff during the regular trading day. Contracts on the Nasdaq gained after the Nasdaq Composite sank by 2.5% during the earlier session.
Investors this week have been weighing concerning signs of lingering price pressures across the U.S. economy against assertions from key central bank officials that the Federal Reserve is ready to take action to bring down inflation.
In Fed Governor Lael Brainard’s hearing before the Senate Banking Committee on Thursday, she suggested the central bank could begin raising interest rates — a move that would tighten financial conditions and help bring down inflation — “as soon as asset purchases are terminated.” The Federal Reserve is currently set to end its asset-purchase tapering process in March.
“What we’re seeing right now is a repricing of the markets, given anticipated rate hikes… That’s going to be the catalyst driving down the market,” WealthWise Financial CEO Loreen Gilbert told Vivaraenews Finance Live on Thursday. “It’s going to be a wild ride.”
And the bevy of recent inflation data has so far helped strengthen the case for a near-term move on monetary policy, many economists suggested. Thursday’s Producer Price Index (PPI) showed the biggest annual rise in wholesale prices on record, in data going back to 2010, even as monthly price gains moderated slightly. And this report came just a day following the December Consumer Price Index (CPI) showing the biggest surge in inflation since 1982. Many economists suggested inflationary pressures would continue at least through the first months of this year before gradually easing.
“Two of the biggest things have been the supply chain disruptions and the fiscal stimulus,” Matthew Miskin, John Hancock Investment Management co-chief investment strategist, told Vivaraenews Finance Live. “As the pandemic comes more under control this year, as the Omicron wave hopefully dissipates, we likely see the supply chain disruptions come off, and then we’re not going to get more fiscal stimulus … That in our view does cause inflation to come down over the course of the year.”
Rising prices have also been hitting companies’ profits as labor costs jump. Of the nearly two dozen S&P 500 companies that had reported fourth-quarter earnings results as of mid-week, 60% of these cited a negative impact from higher labor costs or shortages to sales or profits, according to FactSet.
Quarterly earnings season is set to ramp up on Friday as some of the nation’s largest banks report results for the final months of 2021. BlackRock (BLK), Citigroup (C), JPMorgan Chase (JPM), and Wells Fargo (WFC) are each set to deliver results before market open on Friday.
6:01 p.m. ET Thursday: Stock futures open slightly higher
Here’s where markets were trading Tuesday evening:
S&P 500 futures (ES=F): +4.25 points (+0.09%), to 4,656.25
Dow futures (YM=F): +37 points (+0.1%), to 36,026.00
Nasdaq futures (NQ=F): +18.75 points (+0.12%) to 15,509.00
Emily McCormick is a reporter for Vivaraenews Finance. Follow her on Twitter