Wall Street futures are mixed Thursday as markets digest a surprisingly hawkish Fed statement while bracing for key December quarter earnings from Apple after the close of trading.
Updated at 7:40 am EST
U.S. equity futures traded mixed Thursday, after erasing earlier losses in overnight trading, as investors parsed a surprisingly hawkish policy stance from the Federal Reserve ahead of a key inflation reading and prep for December quarter earnings from Apple after the close.
Fed Chairman Jerome Powell noted in his question and answer session with the media late Wednesday that elevated inflation would likely last through to the end of the year and refused to explicitly rule-out the prospect of rate hikes at consecutive policy meetings from March and beyond — or a single-meeting rate hike of 50 basis points — only committing to be “humble and nimble” with respect to any near-term moves.
“Chair Powell refused to rule out such actions, but that’s because he cannot offer such obvious and potentially risky hostages to fortune,” said Ian Shepherdson of Pantheon Macroecnomics. “The reaction to his words in the stock market makes it clear just how precarious the market is, and that ultimately makes aggressive Fed action more difficult.”
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An earlier statement from the Fed, which suggested the reduction of its $9 trillion balance sheet could occur alongside rate hikes, added to the hawkish tone of the overall messaging, sending Treasury note yields higher and pushing stocks into a sharp late-session pullback.
Looking into the Thursday session, investors will navigate through a trio of top-tier data releases, including a preliminary reading of fourth quarter GDP growth, the Fed’s preferred inflation gauge for the month of December and weekly jobless claims.
On Wall Street, futures tied to the Dow are indicating a modest 85 point opening bell decline while those linked to the S&P 500 are priced for a 3 bump to the downside.
Nasdaq Composite futures are indicating a 25 point opening bell gain as benchmark 10-year Treasury note yields hold at 1.841% in overnight trading.
Tesla (TSLA) – Get Tesla Inc Report shares were the most active mover in pre-market trading, falling 0.75% after the carmaker said its production capacity would remain limited by supply-chain disruptions, but nonetheless pledged to grow sales by 50% this coming year.
Intel (INTC) – Get Intel Corporation Report shares were also in the red, falling near 3% after the chipmaker cautioned that supply chain disruptions would keep a lid on near-term profits growth, clouding the impact of its record fourth quarter revenue haul.
Netflix (NFLX) – Get Netflix, Inc. Report shares, however, surged 4.5% higher in pre-market trading after billionaire investors Bill Ackman revealed a new $1 billion stake in the streaming group.
Apple (AAPL) – Get Apple Inc. Report shares edged higher, too, ahead of the tech giant’s December quarter earnings after the closing bell with investors focused on the impact of supply chain disruptions on its near-term sales outlook.
Away from equities, global oil prices topped $90 a barrel again Thursday, setting a fresh seven-year high, amid simmering geopolitical tensions in eastern Europe as Russia continues to threaten the Ukraine with troop build-ups and incursion hints.
McDonald’s Corp. (MCD) – Get McDonald’s Corporation Report fell 1.95% after the world’s biggest restaurant chain posted weaker-than-expected fourth quarter earnings while noting that input cost increases were only partly off-set by menu price hikes.
Comcast (CMCSA) – Get Comcast Corporation Class A Report, however, jumped 1.1% after it reported fourth-quarter earnings and revenue that beat analysts’ forecasts as growth at its theme parks and within its studio business offset a lull in new broadband internet customers.
Brent futures contracts for March delivery, the global benchmark, were marked 89 cents higher on the session at $90.85 per barrel while WTI futures for the same month, which are tightly-linked to U.S. gas prices, gained 91 cents to $88.26 per barrel.
In overseas markets, Europe’s Stoxx 600 was marked 0.11% lower by mid-day trading in Frankfurt while the MSCI ex-Japan index in Asia slumped 2.09% as the flow-through from last night’s Wall Street selloff hit regional shares. Tokyo’s Nikkei 225 closed down 3.11% at 26,170.30 points.
