U.S. equity futures ticked slightly higher heading into overnight trading Monday after hawkish remarks from Federal Reserve Chair Jerome Powell snapped last week’s winning streak on Wall Street.
Contracts tied to the S&P 500, Dow Jones Industrial Average and Nasdaq Composite were just above breakeven in extended hours following a choppy session that saw all three indexes close lower to start the week.
The Fed’s top leader reiterated in comments at the National Association for Business Economics Monday that the central bank will lean into higher short-term interest rates “as needed” to mitigate fast-rising price levels, with a goal of bringing inflation back down to an annual pace of about 2% while maintaining low unemployment.
“The choppiness is directly related to the comments,” Robert Schein, chief investment officer at Blanke Schein Wealth Management, told Yahoo Finance Live on Monday. “As soon as Federal Reserve Chairman Jerome Powell stated that exact commentary today, markets sold off.”
The Fed is “going to tighten until something breaks,” he added. “That’s either breaking the back of inflation or growth is going to slow.”
Powell’s comments come just a week after investors met the central bank’s long-anticipated move to lift its benchmark Federal Funds Rate by 0.25% (to a target range of 0.25% to 0.50%) with temporary relief after the bump came in on par with what market participants had expected.
Despite providing some clarity to traders who for months have waited for the Fed to take steps forward on tightening monetary conditions, geopolitical turmoil in Eastern Europe and its economic toll continue to muddy the bank’s path ahead in fighting inflation. The Fed is also tasked with beginning quantitative tightening, or rolling assets off its nearly $9 trillion balance sheet.
The CPI print is “not going to look kind,” Allianz Investment Management’s head of ETFs Johan Grahn told Yahoo Finance Live. “That will be the indicator that the Fed is going to hang their hat on.”
Russia’s war in Ukraine also continued to be front-and-center for investors. As of Monday, Ukraine refused to surrender its heavily-attacked port city of Mariupol to Russian forces as the civilian death toll climbed. Energy and commodity prices spiked amid the latest developments in Russia’s war in Ukraine.
U.S. crude oil prices soared more than 6% at session highs to top $112 per barrel, and Brent crude, the international standard, rose above $116 per barrel. Elsewhere in commodities markets, aluminum, palladium and wheat prices also gained on Monday.
Officials in both countries have sporadically signaled a possible negotiation but attempts at talks have so far proven unsuccessful. Ukrainian President Volodymyr Zelenskyy warned recently that if discussions with Vladimir Putin failed, it could mean the start of a third world war.
6:00 p.m. ET: Stock futures tick slightly higher after indexes snap winning streak
Here’s where markets were trading heading into the overnight session Monday:
S&P 500 futures (ES=F): +4.00 points (+0.09%) to 4,456.25
Dow futures (YM=F): +47.00 points (+0.14%) to 34,483.00
Nasdaq futures (NQ=F): +16.75 point (+0.12%) to 14,387.25
Crude (CL=F): +$0.78 (+0.70%) to $112.90 a barrel
Gold (GC=F): +$6.80 (+0.35%) to $1,936.30 per ounce
10-year Treasury (^TNX): +4.3 bps to yield 2.191%
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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