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Stock futures flat ahead of Fed verdict

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U.S. stock futures were flat in overnight trading as investors await the outcome from the Federal Reserve’s two-day policy meeting and comments from Fed Chair Jerome Powell on Wednesday.

Dow futures rose 10 points. S&P 500 futures gained 0.02% and Nasdaq 100 futures dipped 0.12%.

On Tuesday, The S&P 500 closed 0.2% lower to 3,962. The Russell 2000 slumped 1.7% to 2,319. U.S. crude oil futures dropped again, this time by 0.9%, to settle at $64.80 per barrel. Gold futures managed a small 0.1% improvement to $1,730.90 per ounce.

Bitcoin prices struggled again, off 1.6% to $55,745 as the  Dow was down by 130 points, dragged by a near 4% drop in Boeing stock.

The Nasdaq Composite finished with a small 0.1% gain to 13,471, but that was well off its intraday high of 13,620. It was the relative outperformer, rising 0.09% as FacebookAmazonAppleNetflix, and Google-parent Alphabet all registered gains. The technology-heavy index was up more than 1% at one point in the session.

All of these stocks came off highs, with some closing near session lows as the Nasdaq lost steam

On Wednesday, the Fed will release new economic and interest rate forecasts, which could indicate Fed officials expect to raise rates by, or even before, 2023.

The central bank is expected to acknowledge stronger growth, which should put the Fed’s easy policies in the spotlight, especially given the new $1.9 trillion in federal stimulus spending.

Investors will also hear from Fed Chair Powell, who is likely to rock the stock and bond market with his commentary, despite being unlikely to offer specifics.

The Fed policymakers need to upgrade their forecasts to reflect the brighter days ahead, economists say. But if those officials signal earlier and faster hikes in short-term interest rates, it could douse the recent stock market rally and crimp a recovery that’s just starting to warm up.

At the same time, a Fed that suggests it has no concerns about inflation also could worry investors and inadvertently accelerate recently rising long-term rates, such as for home mortgages. That would pose another hazard for the nascent comeback.

The other issue the central bank faces is a recent jump in long-term rates in anticipation of a more vibrant economy and faster inflation. Since Dec. 31, 10-year Treasury yields have climbed from 0.9% to 1.6%. Thirty-year fixed mortgage rates, which move with Treasury yields, have risen from 2.67% to 3.05% during that period.

That’s still historically low, but increasing mortgage rates ultimately could hurt the roaring housing market.

 

 

 

 

 

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