Wall Street’s major benchmarks were close to breakeven in pre-market trading on Tuesday after stocks closed mostly lower earlier in the week. Investors continued to watch the war between Russia and Ukraine and braced for a key monetary policy decision by the Federal Reserve on Wednesday that could send short-term interest rates above near zero for the first time since 2018. The COVID outbreak in China has also presented traders with a new general risk.
Contracts for the S&P 500, Dow Jones Industrial Average and Nasdaq Composite rose slightly ahead of the open after the S&P 500 registered a “death cross” – when the 50-day moving average closes below the 200-day moving average. The Nasdaq extended its fall into a third day to end the previous session, while the Dow ended Monday unchanged.
Commodities continued their cycle of rotations. WTI crude oil futures fell below $100 to $96.70 a barrel as of 7:20 am ET, hitting a two-week low after hitting $130 last week. Gold futures shed 1.8% to trade at $1,925.10 an ounce after recently topping $2,000.
“I fully expect crude to return to $40 or $50 a barrel,” Bloomberg Intelligence’s Mike McGlone said live on Yahoo Finance on Monday. “I think we’re going to see a significant drop in demand because of this war.”
China recorded a sharp rise in daily COVID-19 infections on Tuesday, with the number of new cases more than doubling from a day earlier to a two-year high. The surge in infections is raising questions about the economic costs of the country’s overly restrictive COVID policy.
On the geopolitical front, Washington warned Beijing against providing military or financial assistance to Moscow following talks between US national security adviser Jake Sullivan and senior Chinese diplomat Yang Jiechi in Rome.
Meanwhile, the Kremlin denied reports by US officials that Russia had requested military equipment from China after invading Ukraine. Beijing called the reports “disinformation”.
The story goes on
In the US, markets may be little shocked when central bank officials release the results of their two-day policy meeting on Wednesday, after Federal Reserve Chairman Jerome Powell signaled in recent congressional testimony that he favors a 0.25% hike. But traders will be keeping a close eye on possible changes in the Fed’s outlook on upside plans for the rest of 2022 as war in Eastern Europe hangs over the global economy.
While Russia’s invasion of Ukraine has capped the chances of a 50 basis point upside this month, escalating geopolitical turmoil – with no visible change – is creating a new set of uncertainties for the US economy and complicating the Fed’s way forward on curbing inflation. .
US Federal Reserve Chairman Jerome Powell is shown on a video screen as he testifies before the Senate Committee on Banking, Housing and Urban Affairs at a hearing on the Fed’s Mid-Year Monetary Policy Report to Congress on Capitol Hill in Washington, USA, March 3. , 2022. REUTERS/Jonathan Ernst/Poole
“All signs point to the Federal Reserve raising interest rates by a quarter of a point when their meeting closes on Wednesday,” Greg McBride, chief financial analyst at Bankrate, said in a note. “Questions revolve around how much more and how fast.”
“The war in Eastern Europe gives the Fed a reason to be more cautious, but they will still work to contain the highest inflation in 40 years,” McBride said.
Rising commodity prices, which have sparked discussions about the possibility of an economic downturn, stagflation or potential recession, are putting additional pressure on policymakers already tasked with softening price increases, said David Norris, head of credit at TwentyFour Asset Management in the US.
“Central banks face a mystery,” he said. “All things considered, I have no doubt that this is one of the most important Fed meetings in recent memory, given the current pace of market development and the volatile nature of geopolitical events.”
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7:00 AM ET: S&P 500, Dow and Nasdaq contracts are muted in pre-market trading
Here are the main movements in the markets before the opening on Tuesday:
S&P 500 Futures (ES=F): +6.00 points (+0.14%) to 4,178.00
Dow futures (UM=F): +1.00 points (+0.00%) to 32,945.00
Nasdaq futures (NQ=F): +39.75 points (+0.30%) to 13,085.25
Raw (CL=F): from -6.31 dollars (-6.13%) to 96.70 dollars per barrel.
Gold (GK=F): from -35.70 USD (-1.82%) to 1925.10 USD per ounce
10 year treasury (^TNX): +0.00 b.p. up to a yield of 2.1400%
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6:00 pm ET Monday: Stock futures slightly up after S&P 500, Nasdaq falls for third day
Here’s where the stock traded ahead of Monday’s overnight session:
S&P 500 Futures (ES=F): +10.25 points (+0.25%) to 4,182.25
Dow futures (UM=F): +54.00 points (+0.16%) to 32,998.00
Nasdaq futures (NQ=F): +44.25 points (+0.34%) to 13,089.75
Raw (CL=F): from -0.85 dollars (-0.83%) to 102.16 dollars per barrel.
Gold (GK=F): from -5.90 USD (-0.30%) to 1954.90 USD per ounce
10 year treasury (^TNX): +13.6 b.p. up to a yield of 2.1400%
Trader Peter Tuckman works on the floor of the New York Stock Exchange (NYSE) in New York, USA on March 1, 2022. REUTERS/Brendan McDermid
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Alexandra Semyonova, correspondent for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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