Futures little changed following Fed's hawkish stance
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[January 27, 2022] By
Bansari Mayur Kamdar
(Reuters) - Wall Street futures treaded
water on Thursday, following hawkish comments from the Federal Reserve
in the previous session, while attention turned to quarterly results
from growth companies and final quarter GDP data.
U.S. short-term government bond yields rocketed to their highest in 23
months after the Fed stuck to plans for a rate hike in March and Chair
Jerome Powell warned that inflation may be more persistent than
previously thought.
Fed funds futures showed traders pricing in as many as five rate
increases by December, after previously fully pricing for four.
Adding to investor concerns were festering geopolitical tensions in
Ukraine. The U.S. said on Wednesday it faced challenges in finding
alternative energy sources to Europe if Russia invades Ukraine and
energy flows from Russia are interrupted.
The S&P 500 index nosedived in the previous session reversing all its
early gains amid volatile trading, flirting with a correction for its
third straight session.
The bellwether index would have to close 10% or more below its record
closing high reached on Jan. 3, to confirm it entered correction
territory. It ended the session 9.3% below that level on Wednesday.
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Investors are also keeping an eye out for data due at 08:30 a.m. ET that
is expected to show U.S. economic growth likely accelerated in the
fourth quarter as businesses replenished depleted inventories to meet
strong demand for goods.
Some are worried that a more hawkish Fed could hurt recovery, even
theorizing a sharp economic slowdown or even the next recession.
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![](../images/012722pics/busine43.jpg)
A screen displays the Fed rate announcement as a specialist trader
works at his post on the floor of the New York Stock Exchange (NYSE)
in New York City, U.S., January 26, 2022. REUTERS/Brendan McDermid
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Meanwhile, the fourth-quarter earnings season is in full swing with analysts
expecting earnings from S&P 500 companies to grow 24.4% year-over-year,
according to Refinitiv, as of Wednesday.
Tesla Inc slipped 1.1% after warning that supply chain issues will last
throughout 2022, while chipmaker Intel Corp fell 2.7% on its downbeat
first-quarter earnings forecast due to global supply chain problems.
Other megacap growth companies like Apple, Meta Platforms and Alphabet edged
higher, up nearly 0.2% each. Apple is set to report results after markets close.
At 6:47 a.m. ET, Dow e-minis were down 28 points, or 0.08%, S&P 500 e-minis were
down 1.75 points, or 0.04%, and Nasdaq 100 e-minis were up 3 points, or 0.02%.
Netflix Inc gained 4.4% as billionaire investor William Ackman amassed a new
stake in the streaming service company worth more than $1 billion since its
stock price tumbled starting last Thursday.
Levi Strauss & Co jumped 7.6% after forecasting annual sales and profit above
estimates, bolstered by higher prices and strong demand for its jeans and
jackets.
(Reporting by Bansari Mayur Kamdar and Devik Jain in Bengaluru; Editing by
Shounak Dasgupta)
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