Equity futures opened slightly higher on Tuesday morning as investors awaited a major monetary policy decision and updated the Federal Reserve’s economic outlook.
Earlier in the regular session, the S&P 500 and Dow each ended lower to pull back from the record closing points slashed earlier this week. The loss of the S&P 500 was the first in five days. The Nasdaq ended marginally higher as technology stocks outperformed. The CBOE Volatility Index, or VIX, fell to a low of 19.3 (pandemic) of 19.3, or the lowest level in a year, after months of virus-related anxiety in the markets.
Investors are looking forward to the Federal Reserve’s monetary policy decision in March Wednesday afternoon, along with Fed Chairman Jerome Powell’s press conference later in the day. The commentary will shed light on the central bank’s assessment of the economy in recovery and help indicate to investors how soon an adjustment of current monetary policy will take place. For the time being, the Fed has indicated that it will release monetary policy, with a near-zero interest rate and the purchase of assets at $ 120 billion a month as the economic recovery takes place.
“Overall, I think the best move is no move,” Jack Manley, JPMorgan Asset Management global market strategist, told Yahoo Finance on Tuesday. “We are certainly not going to see any immediate changes to the policy, but I think the markets are kind of anxious about the language that the Fed is going to use to declare that things were much better than I initially expected. Since at least their last meeting. ”
“You have more stimulus than expected, a more successful vaccination than expected, a more resilient labor market that bounced back faster than expected, and of course I think oil prices have risen a lot,” he added. “The best thing I think we could get out of the Fed is an acknowledgment that growth is increasing, that the recovery story is more sustainable, that the worst is behind us, but that there is no immediate pressure on inflation. .. it is the green light for investors to keep this party rolling. ”
Fears that a rapid rise in inflation could lead to a faster-than-expected tightening of monetary policy have kept investors sharp for the past month, fueling a sell-off in technology names earlier in March and turning to cyclical stocks such as energy and bank shares accelerate. . According to Powell, Powell is likely to continue to telegraph that progress in economic recovery remains well below the threshold of causing a Fed move.
“We expected Mr Powell to forcefully argue that the discussion of a short-term policy response to events that have not yet happened, and may not happen at all, or may happen much later than currently expected “is premature,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note.
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6: 01 pm ET Tuesday: Stock futures are slightly higher
Here are the main movements in markets from 18:01 ET:
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S&P 500 futures (ES = F): 3,969.00, with 6.5 points or 0.16% higher
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Dow futures (YM = F): 32,873.00, with 38 points or 0.12% higher
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Nasdaq futures (NQ = F): 13,173.25, with 21.75 points or 0.17% higher
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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