U.S. stock futures were close to overnight trading Wednesday after an aggressive minute readout from the Federal Reserve’s latest policy-making meeting indicated that officials were poised to step in more aggressively to curb inflation, causing major indices in the previous session plummeted.
Futures linked to the S&P 500, Dow Jones Industrial Average and Nasdaq Composite hit the flatline during prolonged trading after a two-day losing streak to the benchmarks. The tech-heavy Nasdaq, which started the week up 2%, capped its second straight session of 2.2% losses. Meanwhile, 10-year government bond yields peaked to 2.6%, their highest level in three years.
Talks detailed in the minutes of the March 15-16 Fed meeting released Wednesday suggested that policymakers will soon begin winding down the central bank’s $9 trillion balance sheet, including $4 trillion in asset purchases that have been amassed to calm the markets after the pandemic hit in early 2020. The minutes also indicated many Federal Open Market Committee (FOMC) participants had favored a 50 basis point hike in benchmark interest rates in March, when the Fed hiked rates for the first time since 2018.
“When those minutes were actually released this afternoon, I think what you really saw was confirmation around the news that the Fed is very determined to fight inflation,” US bank senior vice president Lisa Erickson told Yahoo Finance. Live.
Economists at Bank of America, which recently changed its call for the Fed to include rate hikes of 50 basis points in June and July, said in a note Wednesday that the newly released minutes show enough evidence to tip the scales to a double increase in May.
“The reality is that we are in uncharted waters here and the Fed has a difficult job of unwinding the massive monetary support of the past few years,” Charlie Ripley, senior investment strategist at Allianz Investment Management, said in a note. . “Against this background, it is highly conceivable that uncertainty about the path of monetary policy will remain embedded in the markets and that is exactly what we have seen with the recent movements in interest rates and risky assets.”
Other headwinds that investors must continue to endure are developments in the war between Russia and Ukraine. The United States on Wednesday imposed another series of sanctions, including a ban on American investment in Russia. The sanctions also targeted Russia’s Sberbank and Alfabank, two of the country’s largest financial institutions, as well as the two adult daughters of President Vladimir Putin, the wife and daughter of Russian Foreign Minister Sergei Lavrov, and senior members of the Russian Security Council. However, the latest sanctions lacked energy transactions.
Meanwhile, US Treasury Secretary Janet Yellen warned before the House Financial Services committee on Wednesday that Russia’s war in Ukraine will cause “enormous economic consequences around the world,” including disruptions to the flow of food and energy.
Yellen also said that Russia should be removed from the forum of the Group of 20 Major Economies and that the US will boycott “a number of G20 meetings” if Russian officials participate.
6:13pm ET Wednesday: Futures muted after two-day losing streak
Here’s where the markets traded ahead of Wednesday’s overnight session:
S&P 500 futures (ES=F†: -3.00 points (-0.07%) to 4.472.75
Dow futures (YM=F†: -29.00 points (-0.08%) to 34,370.00
Nasdaq futures (NQ = F† -1.00 points (-0.01%) to 14,504.25
rough (CL=F†: +$1.52 (+1.58%) to $97.75 per barrel
Gold (GC=F†: +$5.00 (+0.26%) to $1,928.10 per ounce
10-year treasury (^TNX†: +5.3 bps for 2.6090% yield
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, April 4, 2022. REUTERS/Brendan McDermid
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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