Traders on the NYSE floor
Source: New York SE
Stock futures slid on Wednesday as investors eyed Wednesday’s Federal Reserve meeting.
Futures tied to the Dow Jones Industrial Average lost 121 points, or 0.35%. S&P 500 futures and Nasdaq Composite futures were down 0.32% and 0.2%, respectively.
The moves come after stocks surged through late January. The Dow Jones Industrial Average ended the day nearly 369 points higher, up 1.09%. The S&P 500 gained 1.46%, capping its best January performance since 2019. The tech-heavy Nasdaq Composite rose 1.67%, its best January performance in 22 years.
On Wednesday, the Federal Reserve will announce how much it is raising interest rates in its latest attempt to curb high inflation. Markets are expecting a 25 basis point or 0.25 percentage point hike from the central bank. On Tuesday, the employment cost index, a measure of wage increases, showed that salaries rose 1% in the fourth quarter, less than the Dow Jones’ 1.1% estimate.
Still, traders could be prematurely anticipating a more dovish tone from the Fed or looking for signs that a pause in rate hikes or even a pivot is imminent.
“Aggressive tightening in 2022 has led to signs of inflation slowing, but from levels that remain unacceptably high,” Ron Temple, chief markets strategist at Lazard, said in a note Tuesday. “With a 25bp hike already priced in by markets, Powell’s job is to send a clear signal of the Fed’s commitment to taming inflation.”
The Federal Reserve is due to announce its decision Wednesday afternoon, followed by Chairman Jerome Powell’s comments.
The winning season continues. Peloton and Meta Platforms are expected to release their quarterly results on Wednesday.