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Dow Futures Fall 90 Pts; Fed’s Hawkish Turn Weighs

Stock Markets28 minutes ago (Jun 17, 2021 07:00AM ET)

(C) Reuters.

By Peter Nurse

Investing.com — U.S. stocks are seen opening lower Thursday, after the Federal Reserve took a hawkish turn, forecasting interest rates increases as early as 2023.

At 7:05 AM ET (1205 GMT), the Dow futures contract was down 90 points, or 0.3%, S&P 500 futures traded 12 points, or 0.3%, lower, and Nasdaq 100 futures dropped 60 points, or 0.4%.

The Federal Reserve’s two-day policy meeting concluded Wednesday with the central bank raising its growth and inflation forecasts, starting a discussion about when to start tapering its bond buying, as well as pointing to two rate hikes of 25 basis points in 2023, a year earlier than expected.

“With many governors lifting dots for 2023 and some also for 2022, tapering in late 2021 becomes much more likely,” said analysts at Nordea, in a note, “which also made for a hawkish readthrough in sharp contrast to the response to the latest couple of surprisingly high inflation reports.”

The main Wall Street indices are all more than 30% higher over the last year, near record levels, helped in no small part by the fiscal and monetary largesse of the U.S. authorities. This assistance, at least from the Fed, may be coming to an end sooner than expected.

For this to happen, the labor market has to continue to improve, which tees up the release of the weekly U.S. jobless claims numbers, at 8:30 AM ET (1230 GMT).

This is expected to show the number of individuals who filed for unemployment insurance for the first time falling to 359,000 for the week ending June 5, the fewest since the pandemic began.

In corporate news, CureVac (NASDAQ:CVAC) stock slumped over 45% premarket Thursday after the drugmaker’s main candidate for a Covid-19 vaccine failed to meet its main goal in late stage clinical trials.

In terms of earnings, investors will digest numbers from computer software company Adobe (NASDAQ:ADBE) and food retailer Kroger (NYSE:KR), among others.

Crude oil prices edged lower Thursday, with a stronger dollar in the wake of the Fed meeting weighing and offsetting signs of a tightening market.

By 7:05 AM ET, U.S. crude was down 0.4% at $71.90 a barrel, while Brent was down 0.4% at $74.08. Additionally, the dollar index climbed 0.7% to 91.795 after surging nearly 1% overnight, its biggest rise since March of last year, and EUR/USD fell 0.5% to 1.1932, continuing the overnight drop of over 1%, its biggest fall since April 2020.

A stronger greenback makes oil priced in dollars more expensive in other currencies, potentially weighing on demand.

Still, losses have been relatively minor Thursday, certainly when compared to the recent gains, as the market has been underpinned by signs of strengthened diamond in the U.S., the world’s largest consumer.

U.S. crude oil stockpiles dropped sharply last week, falling by 7.355 million barrels for the week to Jun. 11, according to the Energy Information Administration.

Dow Futures Fall 90 Pts; Fed’s Hawkish Turn Weighs

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