US stock futures fluctuated Wednesday ahead of the latest Federal Reserve forecasts, which could provide clues as to when policymakers might begin to turn back support for the economy.
Futures pegged to the S&P 500 are down less than 0.1%, suggesting a tepid decline in the opening bell. The broad market index ended Tuesday with a minus of 0.2%. The Nasdaq 100 futures rose 0.1% on Wednesday, suggesting subdued gains in technology stocks.
Stocks are hovering near all-time highs, with many developed economies moving towards ending the lockdown while central banks stick to monetary policies. Investors this week watch for changes in Fed policy makers’ views on inflation, the labor market, and other economic indicators that could provide clues as to when they would begin tapering bond purchases. Tuesday data showed retail sales fell while producer prices rose in May, offering a mixed picture of the recovery.
“We had the initial exuberance and caught up with reality a little. The markets are less liquid in the summer and are digesting some of the anticipation, ”said Shaniel Ramjee, multi-asset fund manager at Pictet Asset Management. “There were some data points that were lower than expected, such as retail sales. It has reduced the cause for concern that the Fed may expire sooner than expected. “
The Fed will release its latest policy decision at 2 p.m. ET. The central bank will also publish updated quarterly economic forecasts from individual policy makers. The new projections could show officials expect interest rates to hike earlier than expected in March. They are also likely to begin discussing when and how to start rolling back bond purchases.
“We are in the camp that all we have seen so far is not what will cause the Fed to change its policy outlook. Employment comes first, inflation second, ”said Samy Chaar, Lombard Odier’s chief economist. “The Fed will stick to its set course and tolerate inflation until the labor market improves.”
In the bond markets, the benchmark ten-year government bond yield was relatively unchanged at 1.496%, compared with 1.498% on Tuesday.
Construction starts in the US in May are expected at 8:30 a.m. Economists expect an increase due to strong demand, while higher building materials costs and labor shortages are driving house prices.
Crude oil prices expand profits as traders position themselves for higher demand due to the global economic recovery and summer travel. The international benchmark, Brent crude oil, rose 0.1% to $ 74.09 a barrel, its highest level since April 2019.
Overseas, the pan-continental Stoxx Europe 600 was relatively flat after its eighth record close in a row.
“The European equity market is benefiting from an environment in which we are still in the acceleration phase,” said Ramjee. “You are not yet under any pressure from the shortage of liquidity in Europe while the reopening is just around the corner.”
In Asia, most major benchmarks were down by close of trading. The Shanghai Composite Index lost 1.1% and the Hong Kong Hang Seng lost 0.7%.
Traders worked on the floor of the New York Stock Exchange on Monday.
Courtney Crow / Associated Press
Write to Anna Hirtenstein at firstname.lastname@example.org
Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8