Futures slip on Ukraine jitters after Fed-driven rally

[March 17, 2022]    By Devik Jain and Susan Mathew

(Reuters) - U.S. stock index futures edged lower on Thursday as Russia tempered expectations around peace talks with Ukraine after a Federal Reserve interest rate hike fueled a Wall Street rally a day earlier.
 

Traders work, as Federal Reserve Chair Jerome Powell is seen on a screen delivering remarks, at the New York Stock Exchange (NYSE) in New York City, U.S., March 16, 2022. REUTERS/Brendan McDermid

Signs of progress in the talks to end what Russia calls "a special military operation" had helped global stocks surge this week, but the Kremlin said on Thursday there was no deal yet.

On Wednesday, the S&P 500 closed up more than 2% while the tech-heavy Nasdaq ended up almost 4% after the U.S. central bank raised interest rates by 25 basis points as expected and forecast equivalent hikes at every meeting this year.

"There are lot of things in there (Fed statement) that actually should have prevented this relief in stock markets, so in that sense, I think it was a bit overdone," said Philip Marey, senior U.S. strategist at Rabobank.

"The main thing at the moment is still the negotiations between the Ukrainians and the Russians. It remains to be seen whether the optimism regarding any peace agreement is overdone."

Shares of big banks slipped in premarket trading, with JPMorgan Chase & Co, Bank of America and Citigroup falling almost 1% each. The U.S. Treasury yield curve flattened to near two-year lows in the wake of the Fed trimming its economic growth forecasts. [US/]

Tesla Inc fell 0.7% to lead losses among megacap growth stocks. The electric vehicle maker said it was doing its best to keep production going at its Shanghai factory while it cooperates with China's COVID-19 prevention measures.

Energy shares rose, as oil prices climbed 4% amid warnings of supply shortages due to a shut-in of Russian oil supplies. [O/R]

Occidental Petroleum led the gains, up 3.1%. The S&P 500 energy sector - which has gained 27.8% so far in 2022 on soaring crude prices - logged its fourth straight day of declines in the previous session.

At 7:15 a.m. ET, Dow e-minis were down 54 points, or 0.16%, S&P 500 e-minis were down 8 points, or 0.18%, and Nasdaq 100 e-minis were down 34.25 points, or 0.25%.

The CBOE volatility index, also known as Wall Street's fear gauge, rose after closing at its lowest level since Feb. 18 in the previous session.

(Reporting by Devik Jain and Susan Mathew in Bengaluru; Editing by Sriraj Kalluvila)

[© 2022 Thomson Reuters. All rights reserved.]
This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.