Dow Jones Futures Fall 185 Pts; Fed Minutes in Spotlight
2022.04.06 14:30
By Peter Nurse
Investing.com — U.S. stocks are seen opening lower Wednesday, with investors cautiously awaiting the release of the minutes of the last Federal Reserve meeting, looking for clues of future monetary policy.
At 7 AM ET (1100 GMT), the Dow Futures contract was down 185 points, or 0.5%, S&P 500 Futures traded 32 points, or 0.7%, lower and Nasdaq 100 Futures dropped 160 points, or 1.1%.
The main Wall Street indices weakened Tuesday, with the blue-chip Dow Jones Industrial Average dropping 280 points, or 0.8%, the broad-based S&P 500 falling 1.3% and the tech-heavy Nasdaq Composite 2.3% lower, after a senior Federal Reserve official hinted at more aggressive tightening in the months ahead to keep inflation in check.
Lael Brainard, who is awaiting confirmation as Vice Chair of the U.S. central bank, called for interest rate increases and rapid reductions to the Fed’s balance sheet to bring U.S. monetary policy to a “more neutral position” later this year.
Now, attention will turn to the release of the minutes of the Fed meeting last month, when the policymakers decided to raise interest rates for the first time since 2018, for guidance on the path for future interest rate hike path and any comments on tapering.
Money markets are currently factoring in the Federal Reserve hiking interest rates by 225 basis points by the end of the year, which, when including March’s 25 basis point increase, would mean the most aggressive annual tightening since 1994.
Elsewhere, the U.S. is coordinating with its European allies on a new round of sanctions, including a bar on all new investments in Russia, on the back of mounting allegations of atrocities by Russian forces in Ukraine.
In corporate news, executives from a number of oil companies, including BP (NYSE:BP), Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), have been invited to appear in front of the House Energy and Commerce Committee to discuss the high gas prices and the industry’s role in pricing markets.
Additionally, JetBlue Airways (NASDAQ:JBLU) announced Tuesday it had made an unsolicited $3.6 billion bid for Spirit Airlines (NYSE:SAVE), attempting to create a stronger competitor to the four major U.S. airlines.
Oil prices edged higher Wednesday, with traders having to balance supply concerns on the back of likely new sanctions on Russia with fears of weaker demand after a build in U.S. crude inventories and a prolonged COVID lockdown in Shanghai, the Chinese financial hub.
U.S. crude oil supply data from the industry body American Petroleum Institute, released late Tuesday, showed a build of just over 1 million barrels for last week, the first increase in crude stocks in three weeks.
Investors now await official numbers from the U.S. Energy Information Administration later in the session for confirmation.
By 7 AM ET, U.S. crude futures traded 1.7% higher at $103.72 a barrel, while the Brent contract rose 1.3% to $108.06.
Additionally, gold futures fell 0.1% to $1,925.80/oz, while EUR/USD traded 0.1% higher at 1.0910.
