NASDAQ 100, Dow Jones, S&P 500 News: Fed Rate Hike Fears Rattle US Stock Futures

Highlights

• Mixed US stock futures; Dow up, Nasdaq down.
• Tech stocks decline; Treasury yields rise.
• Uncertainty over Fed’s upcoming decisions.

US Stock Futures Fluctuate

US stock index futures showcased mixed sentiments ahead of Thursday’s cash market opening. The Dow Jones Industrial Average edged higher by 0.14%, but the S&P 500 and Nasdaq futures dropped by 0.16% and 0.49%, respectively. Renewed concerns about the Federal Reserve’s interest rate policies and potential hikes this year loom large over Wall Street.

Tech Stocks Underperform; Treasury Yields Pressure

During regular trading hours on Wednesday, technology stocks took the heaviest hit. The Nasdaq Composite closed 1.1% down, marking its third consecutive loss, driven largely by over 3% declines in tech giants Apple and Nvidia. Elevated Treasury yields, spurred by strong recent economic data, exerted added pressure on tech stocks. Investors remain apprehensive, fearing the Fed might lean on this data to escalate lending rates to curb inflation. Notably, the 2-year Treasury yield surged by 6 basis points on Wednesday, while Thursday saw mixed movements in the Treasury yields.

Fed Uncertainty Fuels Rate Hike Worries

Investor unease regarding the Fed’s monetary strategy has been on the rise. The robust expansion in the ISM Services index for August and escalating oil prices hinted at potential inflationary pressures, raising concerns about imminent Fed interest rate hikes. These worries were intensified by Fed policymakers’ remarks, emphasizing the importance of economic data in their decisions.

Rate Hike Odds & Market Reaction

Despite the uncertainties, the market still leans towards a 93% likelihood that the Fed will retain the current rates in the upcoming meeting. However, expectations for a rate boost in November hover around 43.5%. Investors should brace for a potential volatile journey in the market, especially as fresh insights from Fed speakers are anticipated alongside the release of the latest jobless claims data.

Corporate Earnings Shift Market

Post-Wednesday’s closing bell, traders sifted through the latest corporate earnings data. C3.ai’s shares dwindled by 5.3% following its reported lower-than-anticipated gross margin for Q1. Conversely, GameStop surged over 6% post its Q2 report, while ChargePoint Holdings witnessed a more than 10% decline after missing revenue predictions.

Short-Term Outlook

Market conditions remain volatile, with a bearish tilt, especially due to uncertainties surrounding the Fed’s next move.