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Futures slip with focus on U.S. rate outlook, Ukraine crisis

Randy Mancini 4 Mar 23
The logo for the NYSE displayed on Wall Street in New York
The logo for the New York Stock Exchange (NYSE) is displayed on Wall Street in New York City, U.S., March 22, 2022. REUTERS/Brendan McDermid

March 23, 2022

(Reuters) – U.S. stock index futures edged lower on Wednesday after megacap stocks fueled a strong rally on Wall Street a day earlier, as investors assessed the outlook for U.S. interest rates following calls from Federal Reserve policymakers for bigger increases.

The hawkish pivot was in line with Chair Jerome Powell’s comments on Monday and came just a week after the U.S. central bank raised interest rates for the first time since 2018. Powell is slated to speak again later in the day.

Traders now see the federal funds rate rising to the 2.25%-2.5% range by year-end, higher than the 1.9% suggested by Fed forecasts last week, raising concerns that a sharp rise in rates over a short period of time could hurt economic growth.

Big banks traded mixed in premarket trading, with Wells Fargo down 0.2% after rallying sharply in the previous session.

The tech-heavy Nasdaq ended 2% higher on Tuesday, as shares of technology and other big growth names extended a rebound.

Tesla Inc fell 1.5% to lead losses among the megacap growth companies. The stock had climbed about 8% in the previous session after the electric-car maker handed over its first German-made cars at its Gruenheide plant.

Energy stocks, the best performing S&P sector so far this year, resumed their march higher after taking a breather on Tuesday. Occidental Petroleum led gains, up 2.1%, as Brent crude climbed above $117 a barrel on increasing supply concerns due to sanctions on Russian oil products. [O/R]

U.S. President Joe Biden headed to Europe on Wednesday for an emergency NATO summit on Ukraine, where invading Russian troops are stalled, cities are under bombardment and the besieged port of Mariupol is in flames.

At 06:43 a.m. ET, Dow e-minis were down 117 points, or 0.34%, S&P 500 e-minis were down 19.25 points, or 0.43%, and Nasdaq 100 e-minis were down 92.75 points, or 0.63%.

GameStop Corp, which was at the heart of the meme stocks rally last year, jumped 11.7% after Chairman Ryan Cohen’s investment company bought 100,000 shares of the videogame retailer.

Adobe Inc slipped 2.9% after it forecast downbeat second-quarter revenue and profit and warned of a hit to its digital media business in Ukraine.

(Reporting by Devik Jain and Amruta Khandekar in Bengaluru; Editing by Sriraj Kalluvila)