U.S. stock futures were mixed early Thursday as traders kept an eye on interest rates and lingering turmoil in Washington.
Dow Jones Industrial Average futures pointed to an opening gain of more than 100 points. S&P 500 futures traded above the flatline while Nasdaq 100 futures were fractionally lower.
Earlier in the day, the S&P 500 and Nasdaq Composite gained 0.2% and 0.4%, respectively. The Dow, meanwhile, closed flat.
Wednesday’s gains for the S&P 500 and Nasdaq came after Intel rallied nearly 7% to lead tech stocks higher. They also followed U.S. interest rates easing from their highest levels since March 2020.
The benchmark 10-year note yield slipped to 1.09% a day after hitting a high of 1.18%. That decline in rates came as two key Federal Reserve officials noted that monetary policy will remain easy for the foreseeable future.
Fed Vice Chairman said the central bank won’t raise rates until inflation reaches 2%. Meanwhile, St. Louis Fed President James Bullard noted there will be a time when the policy would have to be tightened, “but boy, I wouldn’t want to put a specific date on things at this point.”
Rates have been rising this year amid the prospects of increased U.S. fiscal stimulus after the Democrats secured majorities in both the House and Senate. Inflation expectations have also been picking up recently.
“We think inflation in the U.S. will be higher than most expect over the next couple of years,” wrote Adam Hoyes, assistant economist at Capital Economics. “At the same time, we think that investors are overestimating how quickly the Fed will allow monetary conditions to tighten. The Fed’s new flexible average inflation targeting framework suggests that it will allow inflation to rise above 2% for a period over the coming years.”
Investors are also keeping an eye on Washington as House members voted to impeach President Donald Trump for a second time — making him the first U.S. president ever to be impeached twice — as a bipartisan majority charged him with inciting a riot in the U.S. Capitol last week.
To be sure, the market has largely shrugged off the brewing political and civil unrest.
“Normally, we would expect risk assets to pull back during an event like this, but the market seems more focused on the next administration at this point,” said Brian Price, head of investment management at the Commonwealth Financial Network. “
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