Stock futures traded mixed Wednesday morning as investors awaited a key monetary policy decision and updated economic outlook from the Federal Reserve. Treasury yields climbed, and the yield on the benchmark 10-year Treasury note jumped to more than 1.65%.
A day earlier, the S&P 500 and Dow each ended lower to retreat from record closing highs notched earlier this week. The S&P 500’s loss was its first in five days. The Nasdaq ended marginally higher as technology stocks outperformed. The CBOE Volatility Index, or VIX, fell to a pandemic-era low of 19.3, or the lowest level in a year, following months of virus-related anxiety in the markets.
Investors are looking ahead to the Federal Reserve’s March monetary policy decision Wednesday afternoon, along with Fed Chair Jerome Powell’s press conference later in the day. The commentary will elucidate the central bank’s assessment of the economy in recovery, and help signal to investors how soon a tweak to the current monetary policy posturing might take place. For now, the Fed has signaled it will keep monetary policy loose, with benchmark interest rates near zero and asset purchases at a clip of $120 billion per month, as the economic recovery takes place.
“Generally speaking, I think the best move is no move,” Jack Manley, JPMorgan Asset Management global market strategist, told Yahoo Finance on Tuesday. “Certainly we’re not going to see any immediate changes to policy, but I think markets are kind of anxious about the language that the Fed will be using to account for the fact that things have been a whole lot better than I think initially anticipated since at least their last meeting.”
“You have more stimulus than expected, a more successful vaccine rollout than expected, a more resilient labor market that’s bounced back faster than expected and of course oil prices that have risen I think a whole lot more than was expected,” he added. “So the best thing I think we could get out of the Fed is an acknowledgement that growth is picking up, that the recovery story is more durable, that the worst is behind us but that there is no immediate pressing risk of inflation … that’s the green light for investors to keep this party rolling.”
Fears that a rapid rise in inflation might prompt a quicker-than-expected tightening of monetary policy has kept investors on edge over the past month, spurring a selloff in technology names earlier in March and accelerating a rotation into cyclical stocks like energy and bank shares. Still, Powell will more than likely continue telegraphing that progress in the economic recovery remains far below the threshold to trigger a Fed move, according to many economists.
“We expected Mr. Powell to argue forcefully that talk of a near-term policy response to events which have not yet happened, and might not happen at all, or might happen much later than currently expected, is premature,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in a note.
7:19 a.m. ET Wednesday: Stock futures point to a mixed open
Here’s where markets were trading as of 7:19 a.m. ET Wednesday morning:
S&P 500 futures (ES=F): 3,957.5, down 5 points or 0.13%
Dow futures (YM=F): 32,861.00, up 26 points or 0.08%
Nasdaq futures (NQ=F): 13,087.75, down 63.75 points or 0.48%
Crude (CL=F): -$0.75 (-1.16%) to $64.05 a barrel
Gold (GC=F): -$0.90 (-0.05%) to $1,730.00 per ounce
10-year Treasury (^TNX): +3.4 bps to yield 1.6257%
6:01 p.m. ET Tuesday: Stock futures open slightly higher
Here were the main moves in markets as of 6:01 p.m. ET:
S&P 500 futures (ES=F): 3,969.00, up 6.5 points or 0.16%
Dow futures (YM=F): 32,873.00, up 38 points or 0.12%
Nasdaq futures (NQ=F): 13,173.25, up 21.75 points or 0.17%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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