fundamental News - SP500
Stock futures slipped Wednesday evening heading into overnight trading after equities did an about-face in the earlier session, plummeting from record highs as investors mulled the likelihood of tighter Federal Reserve policy and interest rate hikes as soon as March.
Contracts on all three major indexes were down to extend a bearish
day, spurred by the release of minutes from the Federal Open Market
Committee's (FOMC) meeting December 15 that flagged concerns from
policymakers about worsening inflation and signaled
more aggressive intervention by the central bank.
Renewed pressures in tech amid interest rate worries sent the
Nasdaq spiraling 3.1% in its biggest drop since March, and the S&P
500 shed 1.9%, dragged down by losses in real estate. The Dow Jones
Industrial Average tumbled more than 1%, falling for the
first time this year.
“We actually like tech for all of 2022 in our outlook, but there’s
no doubt that tech is going to take it on the chin when the yield curve
does what it does,” Wells Fargo CIO of Wealth & Investment Darrell
Cronk told Yahoo Finance Live. “[The response
to] Fed meeting minutes suggests that long-duration assets like tech or
REITs that are interest-rate sensitive will really come under pressure
in moments when you believe the Fed is going to take a more hawkish
stance.”
The minutes, underscoring this hawkishness, helped the benchmark 10-year Treasury yield top 1.7%, its highest level since April.
“The primary piece of the puzzle is the Fed,” Zephyr market
strategist Ryan Nauman told Yahoo Finance Live. “Markets don’t really
react too greatly to when the Fed starts hiking rates it’s the pace and
if the Fed increases the pace of interest rate hikes
and there are a couple of surprise hikes in there to tame inflation,
that’s when we can really get an impact on equity markets and see a
steep pullback.”
Traders also weighed fresh economic data on Wednesday that showed
private payroll gains last month surpassed economist estimates. ADP,
whose report sets expectations for the "official" government jobs
numbers set for release by the Labor Department on
Friday, reported private sector employers added back 807,000 jobs
during the final month of November, nearly doubling consensus forecasts
and suggesting job growth picked up to help relieve some labor
shortages.
expectation today: bearish