U.S. stock futures were steady Tuesday, on the eve of what’s expected to be the most aggressive Federal Reserve tightening in two decades.
Futures on the Dow Jones Industrial Average
fell 5 points, or 0% to 32975.
Futures on the S&P 500
gained 0.25 points, or 0%, to 4151.
Futures on the Nasdaq 100
decreased 8.25 points, or 0.1% to 13065.
On Monday, the Dow Jones Industrial Average
rose 84 points, or 0.26%, to 33062, the S&P 500
increased 23 points, or 0.57%, to 4155, and the Nasdaq Composite
gained 201 points, or 1.63%, to 12536.
What’s driving markets
The Federal Open Market Committee on Tuesday kicks off its two-day meeting, that is expected to end in its first half-point rate hike since 2020, as well as the launch of its quantitative tightening policy of selling bonds.
Both stocks and bonds suffered a miserable April, with the S&P 500 sliding nearly 9% and the JPMorgan U.S. Aggregate Bond ETF
“Perhaps one of the most interesting shifts seen over the first four months of the year is a move from a market being backstopped by a ‘Fed put’, where ‘buying the dip’ was an infallible strategy, to one operating with a ‘Fed call’, with selling into strength ruling the roost,” said Michael Brown, head of market intelligence at Caxton.
“Such a ‘Fed call’ comes about as a result of policymakers actively wanting to see a tightening in financial conditions, as noted by Chair Powell himself at the last press conference.”
A reminder that not just the Fed is tightening came from the Reserve Bank of Australia, which started its rate-hike cycle with a 25-basis point increase. The Bank of England meets Thursday and also is expected to lift rates.
Market participants might also be discussing the political, and therefore economic, consequences of the reported draft ruling that would overturn the landmark Roe vs. Wade decision that legalized abortion.