US equity futures were little changed in extended trading on Wednesday after stocks retreated from a mini-return to resume losses in the trading session as investors weighed in on several factors including the Federal Reserve’s inflation flight and Russia’s war in Ukraine. Continued to avert risks.
Contracts on key Wall Street benchmarks moved into overnight trading, hovering near breakeven.
The 2020 global stock market crash on Wednesday marked two years since the S&P 500 bottomed out after the World Health Organization moved to declare COVID-19 an official pandemic. Since then, the benchmark has posted its best two-year profit — at least more than 100% — since 1937, according to data from Bespoke Investment Group.
While the recovery makes the period the best two-year bull run in history in terms of strength, US stocks have had a rocky start to 2022 amid rising headwinds, according to Bespoke.
Historically high levels of inflation have tasked the Fed with restraining rising price levels without slowing economic growth. The stock has fluctuated between gains and losses as traders adjusted to scathing comments from Fed Chair Jerome Powell earlier this week, which indicated that officials were “as needed” to ease rapidly rising price levels. Higher short-term interest rates were set to swing. Powell’s remarks come just a week after the central bank raised its benchmark federal funds rate by 0.25% (from a target range of 0.25% to 0.50%).
“Policy makers over-estimated, over-estimated, interest rates and inflation projections, while downplaying economic growth forecasts,” John Lynch, chief investment officer at Comerica Wealth Management, said in a note.
Since 1958, the last nine interest rate tightening campaigns have made the S&P 500 register a lower than average return of about 3.0% over a one-year period, Lynch reported. However, the index has shown a tendency to climb more than three years after the initial rate hike, with an annualized return of around 18.0%.
“The era of quantitative easing is over, and quantitative tightening has begun,” Lynch said. “While policy dynamics are changing, we encourage investors to continue to focus on long-term fundamentals that support growth in the economy and corporate profits.”
The tightening also risks bringing the yield curve, the relationship between the short- and long-term interest rates of fixed-income securities issued by the US Treasury, closer to inverting. An inverted yield curve, when short-term rates exceed long-term rates, has been a sign of a pending economic recession in the past.
“With the economy late in the cycle, fears of an impending recession make defensive sectors relatively more attractive,” said Anu Gaggar, global investment strategist at Commonwealth Financial Network. “Thus, it is imperative for an equity investor to choose their spots carefully.”
“Equity retreat may not be necessary, but defensive relative positions in a potential downturn may help investors ride the wave,” he said.
Despite the Fed’s move to provide some tentative clarity to traders, who have been waiting for months on moves on monetary tightening, geopolitical turmoil in Eastern Europe and its economic toll has hit the bank’s path in fighting inflation. continued to spoil.
Traders continue to monitor developments on the conflict in Eastern Europe and the global reaction. President Joe Biden is set to convene a meeting with NATO allies in Brussels that will set the stage for the announcement of more sanctions against Russia and more humanitarian aid for Ukraine.
6:14 pm ET: Stock futures change little as market volatility continues
Here’s a look at where the major stock index futures opened on Wednesday evening:
S&P 500 Futures (ES = F,: +1.50 points (+0.03%) to 4,449.00
Dow Futures (ym = f,: +3.00 marks (+0.01%) to 34,253.00
Nasdaq Futures (NQ = F, +14.50 marks (+0.10%) to 14,461.50
Raw (CL = F,: -$0.54 (-0.47%) to $114.39 per barrel
Sleep (gc = f,: +$7.20 (+0.37%) to $1,944.50 per ounce
10 year treasury (^tnx,: -5.2 bps yield 2.3210%
Traders work at the New York Stock Exchange (NYSE) on March 9, 2022 in New York, United States. US stocks ended higher on Wednesday. The Dow was up 2.00 percent at 33,286.25, the S&P 500 up 2.57 percent at 4,277.88 and the Nasdaq. rose 3.59 percent to 13,255.55. (Photo by Michael Nagle/Xinhua via Getty Images)
Alexandra Semenova is a reporter for Yahoo Finance. follow him on twitter @alexandraandnyc
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