Traders on the NYSE floor
Stock futures fell Tuesday night as investors anticipated Wednesday’s Federal Reserve meeting.
Futures contracts linked to the Dow Jones Industrial Average lost 48 points or 0.14%. S&P 500 futures and Nasdaq Composite futures were down 0.20% and 0.37%, respectively.
The moves come after stocks surged to end January on a strong note. The Dow Jones Industrial Average ended the day up nearly 369 points, up 1.09%. The S&P 500 gained 1.46% to cap its best January performance since 2019. The tech-heavy Nasdaq Composite rose 1.67%, its best January performance in 22 years.
On Wednesday, the Federal Reserve will announce how much it is raising interest rates in its latest effort to tame high inflation. Markets are expecting a 25 basis point, or 0.25 percentage point, hike from the central bank. On Tuesday, the Employment Cost Index, a measure of wage increases, showed pay rose 1% in the fourth quarter, less than the Dow Jones estimate of 1.1%.
Still, traders can get ahead expecting a more dovish tone from the Fed, or looking for signs that a break in the bulls or even a pivot is coming.
“Aggressive tightening in 2022 has led to signs of inflation easing, but from levels that remain unacceptably high,” Ron Temple, chief market strategist at Lazard, said Tuesday. “With a 25 basis point hike already discounted by markets, Powell’s task is to send an unambiguous signal of the Fed’s commitment to controlling inflation.”
The Federal Reserve will announce its decision on Wednesday afternoon, followed by comments from Chairman Jerome Powell.
The earnings season also continues. Peloton and Meta Platforms are expected to release their quarterly results on Wednesday.