Traders work on the floor of the New York Stock Exchange during morning trading on September 06, 2022 in New York City.
Michael M. Santiago | Getty Images
U.S. stock futures were little changed on Sunday night after soaring interest rates and foreign currency turmoil pushed major averages near their lows for the year.
Dow Jones Industrial Average futures rose 22 points, or 0.1%. S&P 500 and Nasdaq 100 futures were hovering just above the flatline.
Stocks ended a brutal week on Friday, with the blue-chip Dow Jones finding a new intraday low for the year and closing down 486 points. The broad-market S&P 500 temporarily broke below its June closing low and ended down 1.7%. The tech-heavy Nasdaq Composite lost 1.8%.
Heading into the last trading week of September, the Dow Jones and S&P 500 are each down about 6% for the month, while the Nasdaq is down 8%. The Dow and S&P are about 1.2% and 1.6% above their summer lows, respectively. The Nasdaq is 2.9% above its low.
Investors were reacting to the Federal Reserve’s commitment to its rate hike plan to help control inflation. Following the FOMC meeting, Chairman Jerome Powell said the central bank could raise rates to as much as 4.6% before pulling out. Forecasts also show that the Fed plans to remain aggressive this year, raising rates to 4.4% before the end of 2022.
“A lot of traders were expecting hints of a Fed pivot at Jackson Hole or September FOMC policy, but that never happened,” said Edward Moya, senior market analyst at Oanda. . “A hard landing is becoming the base case for many, which means more economic hardship and a much weaker stock market are ahead.”
Bond yields climbed after the Fed decreed another rate hike of 75 basis points. Yields on 2- and 10-year Treasury bills hit highs not seen in more than a decade. On Friday, Goldman Sachs cut its year-end target for the S&P 500 to 3,600 from 4,300.
“It’s unclear how far we go below the summer lows,” said Moya of Oanda. “It doesn’t look like an economic data release or a speech from the Fed will convince markets that a slowdown in this aggressive tightening campaign will happen any time soon.”
Looking ahead, traders anticipate Friday’s release of personal consumption expenditure data, the Fed’s favorite inflation indicator. Durable goods and consumer sentiment figures will also be released this week.
A slew of Fed speakers – including Fed Vice Chairman Lael Brainard, St. Louis Fed Chairman James Bullard, San Francisco Fed Chair Mary Daly and Fed Governor Michelle Bowman – and President Powell are also expected to speak at various events this week.