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US Stock Index Futures Mixed as Investors Digest Powell’s Inflation Remarks, Biden’s State of Union Address

By:
James Hyerczyk
Updated: Feb 8, 2023, 13:42 UTC

Powell failed to say anything significant so investors are still wondering when the Fed will stop raising rates and whether there will be a recession.

NASDAQ Composite, S&P 500, Dow Jones Industrial Average

In this article:

U.S. stock index futures are trading mixed during Wednesday’s pre-market session as investors continue to assess the impact of Federal Reserve Jerome Powell’s Tuesday afternoon speech. Traders are also digesting President Joe Biden’s State of the Union address, delivered Tuesday evening.

At 07:30 GMT, the blue chip Dow Jones futures contract is trading 34161.00, down 45.00 or -0.13%. The benchmark S&P 500 Index futures contract is at 4171.75, down 4.00 or -0.10% and NASDAQ futures are trading 12777.75, up 1.00 or +0.01%.

Powell’s Less-Hawkish Tone Spikes Stock Indexes Higher

The major U.S. stock indexes jumped on Tuesday as investors digested comments from Federal Reserve Chair Jerome Powell about how long the central bank may need to tame inflation.

Powell failed to deliver the hawkish message that many investors had expected. Instead his comments renewed investor hopes for less aggressive monetary policy that wavered after a strong U.S. jobs report last Friday.

“We didn’t expect it to be this strong,” Powell said at the Economic Club of Washington, referring to the nonfarm payrolls report for January, but it “shows why we think this will be a process that takes quite a bit of time.”

Powell also said, “The reality is we’re going to react to the data,” Powell said. “So if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than is priced in.”

Biden’s 2023 State of the Union Address: More Cheerleading, Less Substance

President Joe Biden’s 2023 State of the Union address to Congress failed to impress stock market futures traders overnight. But that was expected. Investors have shown little interest in events taking place in Washington, lately.

Biden was upbeat on his economic policies after recent reports showed near record low unemployment and strong job growth, but his speech showed he has broader ambitions to reshape the economy.

He called for increasing taxes on the wealthiest Americans in addition to curbing anticompetitive practices and increasing rights for workers.

Ultimately, in a divided Congress, it will be difficult for Biden to implement much of his plan the way he may hope so.

Short-Term Outlook

Powell failed to say anything significant on Tuesday so investors are still wondering when the Fed will stop raising rates, how high the Fed is willing to raise rates and whether there will be a recession.

Essentially, it all comes down to how quickly the Fed nears the end of its rate hike campaign. Investors believe the Fed is close to the end, which is why we’re not likely to see a short-term crash. But stocks will have a hard time sustaining gains is there is uncertainty.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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