Stock Futures Fall in Anticipation of Imminent Fed Meeting This Week

The US market saw stock index futures fall during the pre-trading session on Tuesday, January 25th, following an extremely volatile session. During the session, the Dow Jones Industrial Average overcame a 1,100-point deficit to end the day on a positive note. However, the futures contracts pegged to the DJIA had given up about 350 points, or 1.1%, early Tuesday morning. Furthermore, the futures of the S&P 500 ceded 72 points, or 1.6%, while the Nasdaq 100 futures declined by 315 points, or 2.2%.

Play-by-Play Run-through of Stock Futures’ Performances

In Monday’s regular trading session, the DJIA was up by 99 points, or 0.3%, snapping a six-day losing streak. Meanwhile, the index also retreated by 3.25% at the lows of the day. For the same period, the S&P 500 inched upwards by 0.28% to register its first positive session in five days. This came on the back of an initial 4% decline from earlier in the day. The S&P 500 even incurred a retracement of 10% from its record close on January 3rd at one point. Lastly, the tech-heavy Nasdaq Composite advanced by 0.6% after initially suffering a 4.9% setback from earlier in the day. This was the first time the index would overcome an initial 4% decline to eventually finish higher in over 13 years.

Ally’s chief money and markets strategist Lindsey Bell, weighed in on the development in a recent media session. According to Bell:

“The buyers are coming in to buy the dip here, things looked a little bit over-stretched to the oversold side, so it’s not surprising. But that doesn’t mean we are going to be in the clear … there’s a lot that we have going on this week.”

Bell suggested that the recent spate of volatility is not likely to subside until the US Federal Reserve begins to hike interest rates.

US Fed Says It Will Do All It Can Suppress Inflation

The Fed suggested that it would increase interest rates beginning in March and as frequently as required, to combat inflationary threats. The US central bank plans to meet at least twice this week, and market stakeholders will be paying close attention. The anticipation from the Fed eventually hiking the rates, as well as the imminent Federal Reserve Open Market Committee meeting, is a driving force behind the market’s recent volatility.

Furthermore, the generally hawkish disposition by the governing bank to start the new year is also influencing current investor decisions. In a bid to reduce their exposure to risks, many investors are now turning to the stocks of regional banks. The latter traditionally fare well even in the midst of a hawkish environment.

Alli McCartney from UBS Private Wealth Management also touched on the recent development in a media session.

“We’re in what I call the triple threat of … rapidly rising rates, and the market has been working overtime, as have all of the algorithms, to try to figure out what that means, and what that pace means for valuations and global equities,” said she.

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