Stock futures traded lower as the overnight session began Wednesday evening, with equities struggling to catch a break as inflation concerns remained at the center of investors’ attention.
By the close of Wednesday’s regular session, the major stock indexes logged a third straight day of losses. The cyclical energy sector led declines in the S&P 500, while technology stock clawed back steep intraday drops to pull the Nasdaq within striking distance of the flat line by market close.
Equities have added to losses this week as investors contemplated prospects that the post-pandemic economic recovery might stir up lasting inflation and prompt a roll-back of the Federal Reserve’s crisis-era monetary policies. Companies from Procter & Gamble (PG) to Kellogg (K), to Target (TGT) and Home Depot (HD) have cited rising price pressures this year, with consumer and business demand far outstripping supply as more businesses reopen and social distancing restrictions ease.
“I don’t think investors should be surprised at all,” about the recent volatility in markets, Stephanie Roth, capital markets economist at JPMorgan Private Bank, told Yahoo Finance. “We’ve had a really strong recovery, both from an economic perspective and a market perspective, and now we’re sitting here and we’re at the peak of economic momentum, and now it’s just about a transition into mid-cycle. so that tends to bring about volatility and transitions under the surface.”
“We were expecting strong growth this year, but now the focus should be on the risks – the risks certainly around inflation, that has come up quite a bit, what the Fed is going to do, and then [whether there will] be any concerns around the COVID outbreak,” she added. “For now, everything is priced to perfection and that makes sense, but we should just be watching and mindful of the risks that could come up and that is what the market is starting to focus on.”
The Federal Open Market Committee’s April meeting minutes showed on Wednesday that “a number of participants suggested” that if the economy continues to improve rapidly, “it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases,” which have currently been taking place at the aggressive rate of $120 billion per month over the past year. The Federal Reserve’s quantitative easing, along with its more than year-long stretch of maintaining interest rates near zero, have helped support both economic activity and asset prices amid the pandemic.
Still, however, FOMC members “generally noted that the economy remained far from the Committee’s maximum-employment and price-stability goals,” the minutes added.
On Thursday, the Labor Department’s weekly jobless claims report is due for release, offering investors the latest look at the state of the job market recovery in the U.S. New weekly jobless claims are expected to set a fresh pandemic-era low of 450,000 for the period ended May 15, inching closer to pre-COVID levels as hiring picks back up.
6:12 p.m. ET Wednesday: Stock futures open lower
Here were the main moves in markets Wednesday evening:
S&P 500 futures (ES=F): 4,109.5, down 2 points or 0.05%
Dow futures (YM=F): 33,805.00, down 26 points or 0.08%
Nasdaq futures (NQ=F): 13,223.75, down 9.75 points or 0.07%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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