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Market Snapshot: U.S. stock futures stall as traders reassess peak Fed narrative

U.S. stock futures were softer Thursday as the latest risk asset rally struggled to maintain momentum.

How are stock-index futures trading

S&P 500 futures

dipped 21 points, or 0.5%, to 3948

Dow Jones Industrial Average futures

fell 172 points, or 0.5%, to 33419

Nasdaq 100 futures

eased 67 points, or 0.6%, to 11672

On Wednesday, the Dow Jones Industrial Average

fell 39 points, or 0.12%, to 33554, the S&P 500

declined 33 points, or 0.83%, to 3959, and the Nasdaq Composite

dropped 175 points, or 1.54%, to 11184. The Nasdaq Composite is up 8.35% from its 2022 closing low hit on October 14, but remains down 28.5% for the year to date.

What’s driving markets

Equity futures were struggling to make headway on Thursday as the rally, caused by recent data suggesting cooling U.S. inflationary pressures, looked to be running out of steam.

The S&P 500 is up 5.6% since last Thursday when the U.S. consumer prices index for October came in softer than expected and raised hopes the Federal Reserve may not need to be quite as aggressive in raising interest rates as previously feared.

However, surprisingly robust retail sales data released on Wednesday has caused some traders to question this narrative. Goldman Sachs now reckons Fed rate hikes may peak next year at 5.25%, above market forecasts.

“After a strong rebound over recent days, the momentum behind risk assets [has] started to peter out…thanks to some hawkish comments from Fed officials, weak corporate earnings, as well as strong retail sales numbers that dampened hopes about a dovish pivot from the Fed,” said Jim Reid, strategist at Deutsche Bank.

Peter Ganry, head of equity strategy at Saxo Bank, said “investors are not following through on the momentum around the ‘peak rates’ narrative,” and that traders would need to watch key levels for S&P 500 futures of 3,964 on the downside and 4,000 on the upside.

Helping underpin sentiment are calm reactions to tech earnings following Wednesday’s closing bell. Shares in Nvidia

are up about 2% in premarket trade after the chipmaker’s results and comments contained no nasty surprises. And Cisco

stock is adding 4% after the network group offered encouraging guidance.

U.S. economic updates set for release on Thursday include the weekly initial jobless claims, alongside October building permits, housing starts numbers and the Philadelphia Fed manufacturing index, all due at 8:30 a.m. Eastern.

And it’s yet another day chock full of Fed chatter – though not all may touch on monetary policy. Atlanta Fed President Raphael Bostic is down to speak at 7:30 a.m.; St. Louis Fed President James Bullard talks at 8 a.m.; Fed Governor Michelle Bowman speaks about financial literacy at 9:15 a.m.; and Fed Governor Phillip Jefferson makes remarks about inclusive growth at 10:40 a.m..

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