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St.
Louis Fed President James Bullard said on Thursday the U.S.
central bank needs to keep raising interest rates given that its
tightening so far "had only limited effects on observed
inflation".
The comments, coming on the heels of strong retail sales data,
dampened hopes of the Fed toning down its hawkish approach on
rate hikes following recent softer-than-expected inflation
reports.
All the three major U.S. indexes posted losses for the second
straight session on Thursday and are eyeing weekly declines
after notching solid gains last week.
"We spent most of the day recovering from comments from the Fed
about the direction of interest rates," said Paul Nolte,
portfolio manager at Kingsview Asset Management in Chicago.
"Markets are getting a little bit more comfortable with the fact
that (a Fed pivot) is not likely."
The Fed is expected to downshift to a 50-basis point rate hike
in December, but economists polled by Reuters say a longer
period of U.S. central bank tightening and a higher policy rate
peak are the greatest risks to current outlook.
The retreat in stocks after Bullard's comments "shows how
sensitive markets can be when it comes to the eventual
destination of the terminal rate," said Michael Hewson, chief
market analyst at CMC Markets.
At 7:07 a.m. ET, Dow e-minis were up 197 points, or 0.59%, S&P
500 e-minis were up 31.25 points, or 0.79%, and Nasdaq 100
e-minis were up 116.25 points, or 0.99%.
Gap Inc gained 8.6% in premarket trade after the retailer
surpassed quarterly sales and profit estimates, helped by steady
demand despite a surge in inflation.
U.S.-listed shares of JD.com Inc gained 5.3% after the
e-commerce firm posted better-than-expected third-quarter
revenue, as COVID-19 lockdowns in China led more consumers to
shop online.
(Reporting by Shubham Batra, Ankika Biswas and Amruta Khandekar
in Bengaluru; Editing by Shounak Dasgupta)
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