Traders on the floor of the NYSE, Oct. 12, 2022.
Stock futures were little changed Sunday evening as investors weighed a potential slowdown or pause in Federal Reserve interest rate hikes and looked ahead to a busy week of earnings.
Futures tied to the Dow Jones Industrial Average were lower by 27 points, or 0.08. S&P 500 futures barely budged and Nasdaq 100 futures also sat near the flat line.
On Friday, the major averages rallied to finish the week after briefly losing the momentum of the January rally. The Nasdaq posted a slight gain for the week. However, the Dow and S&P each logged down weeks. All of the major averages remain in the green for the month. The Nasdaq is leading the others with a 6.44% year-to-date gain.
“The markets are becoming increasingly enthused that the bout of high inflation is quickly moving behind us and the period of tight monetary policy is coming to an end,” said Brian Levitt, global market strategist at Invesco. “While the economy will likely still have challenges by the middle of the year, the market is looking ahead to what will likely become a sustained recovery.”
Investors have been weighing the possibility that the Fed is getting ready to slow the pace of its inflation-fighting rate hikes after economic data last week showed a decline in wholesale prices and retail sales. They’re also absorbing comments made Friday by Fed Governor Christopher Waller, who said he favors a quarter percentage point rate increase at the next meeting.
Markets have priced in a 99.7% chance of a 25-basis point hike, according to CME Group data, which would bring the interest rate to a targeted range of 4.5%-4.75%.
There are no speeches from Fed officials on the calendar as the central bank will meet the following week, on Jan. 31 and Feb. 1. However, investors will be monitoring another batch of economic data, including the Fed’s preferred inflation measure, the personal consumption expenditure price index, due out Friday.
In the meantime, earnings reports could keep the market on edge, with about 40% of the Dow scheduled to release their latest financial results and give investors more insight into how companies are weathering inflation and interest rates. Microsoft, IBM, Tesla, Visa and Mastercard are some of the big names on deck.