Stock futures turn mixed paring earlier losses

Interest rate hikes expected as soon as March

Former OMB Director Russ Vought reacts to the the Federal Reserve signaling it could ‘soon’ raise interest rates on ‘Fox Business Tonight.’

U.S. equity futures pared earlier losses, turning mixed after being down as much as 300 points on the Dow.

Futures had tanked following after the Federal Reserve indicated it plans to start raising interest rates soon to cool inflation.

The major futures indexes suggest a slight decline on the Dow and a gain of 0.1% on the Nasdaq.

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Wall Street's benchmark S&P 500 index lost 0.1% on Wednesday after a Fed statement said the U.S. central bank "expects it will soon be appropriate" to raise rates. 

FED SIGNALS INTEREST RATE HIKE COULD COME 'SOON' AS INFLATION RAGES

Investors expect as many as four rate hikes this year, starting in March. The Fed said monthly bond purchases that push down long-term rates by injecting money into the financial system would be phased out in March.

Traders will examine a slew of economic reports.

The first estimate of 4Q GDP will be released. The Refinitiv forecast is for a seasonally adjusted annual growth rate of 5.5%, up from 2.3% growth in the third quarter.

At the same time the Labor Department is out with its tally of new claims for unemployment benefits for last week. Expectations are for 260,000, after surging unexpectedly to a 3-month high of 286,000 the prior week amid a wave of Omicron infections. Continuing claims, which track the total number of unemployed workers collecting benefits, are anticipated to rise slightly to 1.65 million, still below pre-pandemic levels.

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The Census Bureau is expected to say that new orders for manufactured big-ticket items fell a seasonally adjusted 0.5% month-over-month in December, following a larger-than-expected increase of 2.6% the prior month. If you factor out the transportation component, orders are anticipated to rise 0.4% after a 0.9% pop in November. Orders for core capital goods, a closely watched proxy for business spending, are also seen jumping 0.4% in December after a flat November.

Finally the National Association of Realtors is out with its index of pending home sales for December. Economists surveyed by Refinitiv expect a slight decline of 0.2%, following a surprise drop of 2.2% in November on low inventory. 

It will be the busiest day so far this 4Q earnings season with four Dow members posting results: McDonald’s and Dow Inc in the morning, then Apple and Visa in the afternoon. Ahead of the open investors will focus on telecom and media giant Comcast, hospital operator HCA Healthcare, aerospace/defense firm Northrop Grumman, cigarette maker Altria, and low-cost airline Southwest Airlines among others.

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In the afternoon it’s all about Apple. The iPhone maker is expected to say fiscal 1Q earnings-per-share jumped 12% to $1.89 on a 6.5% rise in revenue to $118.66 billion, as it contends with supply chain issues and the impact of retail store closings from Omicron.

In Europe, London's FTSE was off 0.6%, Germany's DAX fell 1.6% and France's CAC declined 1.2%.

In Asia, Japan's Nikkei 225 fell 3.1%, the Hang Seng in Hong Kong retreated 1.9% and China's Shanghai Composite Index declined 1.8%.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 34168.09 -129.64 -0.38%
SP500 S&P 500 4349.93 -6.52 -0.15%
I:COMP NASDAQ COMPOSITE INDEX 13542.118929 +2.82 +0.02%

On Wall Street, the S&P 500 slipped to 4,349.93 after being up 2.2% ahead of the Fed announcement.

The Dow Jones Industrial Average fell 0.4% to 34,168.09. The Nasdaq composite was little-changed at 13,542.12, shedding a 3.4% gain earlier in the day.

Wall Street rose immediately after the Fed statement but major indexes gave up their gains as Chair Jerome Powell took questions about how and when the central bank will let its balance sheet shrink after buying trillions of dollars of bonds through the pandemic. That would put upward pressure on market interest rates.

The last time the Fed raised rates and shrank its balance sheet at the same time was in late 2018. The S&P 500 lost nearly 20%.

Intel posted $20.5 billion in fourth-quarter sales, up 3% from the year-earlier period. The company generated net income of $4.6 billion, down 21% year-over-year. Wall Street expected sales of $19.2 billion and net income of $3.2 billion.

TESLA POSTS RECORD PROFITS, EXPECTS SUPPLY CHAIN WOES TO PERSIST

Tesla posted a record annual profit of $5.5 billion, up from the previous record of $3.47 billion in 2020, which was its first profitable year. It also had a record fourth-quarter profit of $2.32 billion in 2021 according to its earnings report, but still saw its stock take a downward turn after the closing bell before it made a recovery.

Bitcoin and other cryptocurrencies traded lower as well in response to the Fed. Bitcoin traded below $37,000

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In energy markets, benchmark U.S. crude lost 11 cents to $87.24 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.75 to $87.35 on Wednesday. Brent crude, the price basis for international oils, shed 3 cents to $89.93 per barrel in London. It advanced $1.76 the previous session to $89.96.

The Associated Press contributed to this report.

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