Dow futures fall slightly as investors weigh the prospect of higher interest rates | Catch My Job


Traders at NISE

Source: NISE

Futures tied to the Dow Jones Industrial Average were lower on Thursday evening as investors continued to weigh in on earnings reports and tougher language from Federal Reserve speakers.

Futures linked to the 30-share index fell 46 points, or 0.1%. S&P 500 futures traded almost flat, while Nasdaq-100 futures jumped 0.1%.

Thursday brought another day of decline for the major indexes. The S&P 500 lost 0.31% and the Nasdaq Composite lost 0.35%. The Dow Jones Industrial Average fell 0.02%.

Cisco shares rose in regular trading, jumping on earnings results. Meanwhile, companies that reported results after the close, such as Gap, Ross Stores and Palo Alto Networks, added to the mix of companies that beat expectations.

But investors also had to consider comments from more than half a dozen Fed speakers at events around the country. Namely, the President of the Federal Reserve of St. Louis, James Bullard, said on Thursday that “the policy rate is not yet in a zone that can be considered restrictive enough.” He suggested that the appropriate zone for the federal funds rate could be in the range of 5% to 7%, which is higher than the market price.

Meanwhile, yields rose in tandem, with the two-year Treasury yield rising to 4.45%. The move alarmed investors who worry that rising rates could trigger a recession.

Investors have responded to any new economic data or any language in recent weeks that might indicate what the Fed will do next with interest rates, said Shelby McFadden, investment analyst at Motley Fool Asset Management. In this case, she said the inflation comments led investors to believe the Fed didn’t think the economy had cooled enough.

“There was absolutely a thirst for relief and a tug of war,” she said of the investor response in recent days. “But at the end of the day, it really just depends on whether this period of inflation becomes deflationary slower than it’s been rising, and what the Fed decides to do next.”

Investors will be watching data on existing home sales on Friday for any signs of a cooling economy. Boston Fed President Susan Collins will speak in the morning.


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