Thursday April 7th


Stock futures are flat following two-day Fed sell-off

U.S. Stock index futures were flat on Thursday as the market tried to recover from back-to-back losing sessions, while traders digested the Federal Reserve’s plans to tighten monetary policy. Futures on the Dow Jones Industrial Average were flat, S&P 500 futures climbed 0.1%, and Nasdaq 100 futures advanced 0.2%. Shares of HP Inc surged 15% in the premarket after Warren Buffett’s Berkshire Hathaway disclosed a stake in the tech hardware maker. The Fed on Wednesday released the minutes from its March meeting, which showed that officials planed to reduce their trillions in bond holdings with a consensus amount around $95 billion. Meanwhile, policymakers indicated that one or more 50 basis-point interest rate hikes could be warranted to battle surging inflation. “The minutes from the latest FOMC meeting portray a higher level of urgency than previous communication as the Fed has circled on a commitment to run the balance sheet down faster than market participants may have expected,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. Officials “generally agreed” that a maximum of $60 billion in Treasurys and $35 billion in mortgage-backed securities would be allowed to roll off, phased in over three months and likely starting in May.  The news sent the blue-chip Dow down more than 100 points Wednesday, while the S&P 500 slid 1%. The tech-heavy Nasdaq Composite dropped another 2.2%, bringing its week-to-date losses to 2.6%. Those losses came after comments from Fed Governor Lael Brainard pushed stock prices lower on Tuesday. “It does seem like they are talking up the possibility of raising rates by 50 basis points at the next meeting so the hope is that message is well telegraphed in advance,” said Brian Price, head of investment management at Commonwealth Financial Network. “I expect that volatility will remain elevated for the time being as there is a lot of uncertainty for investors to digest right now.” Investors await the weekly jobless claims data Thursday morning, which is expected to show a total of 200,000 claims filed. Investors also continue to monitor the Ukraine-Russia war, as Ukraine asks NATO for more weapons. "Ukraine’s urgent needs, the sustainability of supplies, and long-term solutions which will help Ukraine to prevail,” Ukrainian Foreign Minister Dmytro Kuleba said in a tweet. Japan stocks dropped more than 1% and other Asia-Pacific markets fell on Thursday following two days of declines on Wall Street. The Nikkei 225 in Japan fell 1.69% to 26,888.57, while the Topix slid 1.56% to 1,892.90. Both indexes slipped nearly 2% earlier in the session before paring some losses. Shares of Fast Retailing dropped 3.36% to 60,180. Mainland Chinese stocks declined. The Shanghai composite was down 1.42% at 3,236.70, while the Shenzhen component dropped 1.65% to 200.89. Hong Kong’s Hang Seng index slipped 1% in late trade and the Hang Seng tech index was 2.38% lower. In Korea, the Kospi slipped 1.43% to 2,695.86 while the Kosdaq declined 1.61% to 927.95. Oil prices clawed back some losses on Thursday after tumbling more than 5% to a three-week low in the previous session after consuming nations announced a huge release of oil from emergency reserves to offset supply lost from Russia. Brent crude futures climbed $1.49, or 1.5%%, to $102.56 a barrel, while U.S. West Texas Intermediate crude futures rose $1.36, or 1.5%, to $97.69 a barrel. International Energy Agency member countries agreed to release 60 million barrels on top of a 180 million-barrel release announced by the United States last week to help drive down prices in a tight market following Russia’s invasion of Ukraine. Analysts said even with the emergency oil stocks release, supply remained tight. Gold prices inched up on Thursday, as inflation worries intensified by the Ukraine war and mounting sanctions on Russia eclipsed pressure from the U.S. Federal Reserve’s aggressive policy stance. Spot gold rose 0.2% to $1,930.21 per ounce. U.S. gold futures gained 0.6% to $1,934.1.