January 29, 2023

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Stock futures are flat as investors weigh the Fed’s next policy move

Traders on the floor of the New York Stock Exchange, Oct. 12, 2022.

Source: NYSE

Stock futures rose on Monday as investors weighed a possible slowdown, or pause, from the Federal Reserve and prepared for a busy earnings week.

Futures related to the Dow Jones Industrial Average gained 75 points, or 0.22%. S&P 500 futures rose 0.15%, while the Nasdaq 100 added 0.2%.

On Friday, the major averages rose to end the week after briefly losing momentum from the January rally. The NASDAQ posted slight gains for the week. However, the Dow Jones and Standard & Poor’s both posted losing weeks. All major averages remain in green for the month. The Nasdaq is leading the others with a gain of 6.44% year-to-date.

Investors have been weighing the possibility that the Federal Reserve is preparing to slow the pace of its increases in the fight against inflation after last week’s economic data showed Low wholesale and retail prices.

On Friday, investors digested comments from Federal Reserve Governor Christopher Waller favoring a quarter-percentage-point increase in interest rates at the next meeting. a Wall Street Journal report Meanwhile, Sunday raised the prospect of a spring pause in rate hikes – a sign that the Fed may be nearing the end of its rate hike campaign.

“With investors growing more confident on the inflation side, it is clear that they are now looking beyond the current rally cycle, to a final halt and perhaps even a line cut,” Henry Allen, a strategist at Deutsche Bank, wrote in a note to clients Monday. “But with investors now pricing in good inflation news, the risk is that if inflation proves to be more persistent, we could be in for another bear market rally like we saw last summer.”

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markets It is priced at 99.7% chance of a 25 basis point increase, according to CME Group datawhich brings the interest rate to the target range of 4.5% -4.75%.

There are no speeches from Fed officials on the calendar ahead of the central bank’s policy meeting on January 3rd. 31 and Feb. 1. Still, investors will be on the lookout for another batch of economic data, including the Fed’s preferred inflation measure, the Personal Consumer Expenditure Price Index, due for release on Friday.

Meanwhile, earnings reports It can keep the market on edge, in which about 40% of the Dow Jones Industrial Average is due to release their latest financial results and provide more information on how companies are facing inflation and interest rates. Some of the big names on deck include Microsoft, IBM, Tesla, Visa, and Mastercard.