Stock futures opened slightly higher on Tuesday morning, with investors awaiting a major monetary policy decision and the Federal Reserve’s updated economic outlook.
At the start of the regular session, the S&P 500 and Dow ended lower, backing from the record highs of closing recorded earlier this week. The S&P 500 loss was the first in five days. Nasdaq ended up marginally up as technology stocks outperformed. The CBOE Volatility Index, or VIX, dropped to the lowest level of the pandemic era 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 March monetary policy decision on Wednesday afternoon, along with Fed President Jerome Powell’s press conference later in the day. The commentary will elucidate the central bank’s assessment of the recovering economy and help signal to investors when an adjustment in the current monetary policy stance may occur. For the time being, the Fed has signaled that it will maintain loose monetary policy, with basic interest rates close to zero and asset purchases of around $ 120 billion a month, as the economic recovery takes place.
“In general, I think the best move is not to move,” Jack Manley, global market strategist at JPMorgan Asset Management, told Yahoo Finance on Tuesday. “We are certainly not going to see any immediate policy changes, but I think the markets are kind of anxious about the language the Fed will use to explain the fact that things have been much better than I initially thought since at least their last meeting.”
“You have more stimulus than expected, a more successful than expected vaccine launch, a tougher job market that has recovered faster than expected and, of course, oil prices that have gone up, I think much more than expected, ”he added. “So the best thing I think we can get from the Fed is an acknowledgment that growth is increasing, that the recovery story is more lasting, that the worst is over, but that there is no immediate risk of inflation … this it’s the green light for investors to keep this party going. ”
Fears that a rapid rise in inflation could lead to a faster-than-expected tightening of monetary policy have kept investors nervous over the past month, spurring a sale of technology names in early March and accelerating a rotation in cyclical stocks like energy and bank shares. Still, Powell will more than likely continue to telegraph that progress in the economic recovery remains well below the threshold to trigger a Fed measure, according to many economists.
“We expected Mr. Powell to argue vehemently that speaking of a short-term political response to events that have not yet happened and may not happen, or may happen much later than currently expected, is premature,” Ian Shepherdson, chief economist from Pantheon Macroeconomics, wrote in a note.
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6: 01 pm ET Tuesday: Stock futures open slightly higher
Here are the main movements in the markets as of 6:01 pm ET:
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S&P 500 Futures (ES = F): 3,969.00, an increase of 6.5 points or 0.16%
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Dow Futures (YM = F): 32,873.00, an increase of 38 points or 0.12%
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Nasdaq Futures (NQ = F): 13,173.25, an increase of 21.75 points or 0.17%
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Emily McCormick is a reporter at Yahoo Finance. Follow her on Twitter: @emily_mcck
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