Stock futures dropped Wednesday, but bond yields stabilized following the announcement from Fed Chair Jerome Powell regarding the Central Bank’s intention to further raise interest rates by half a percentage point at its next meeting.
Contracts linked to Dow Jones Industrial Average dropped 100 points, or 0.3% to 34,642, while S&P 500 futures were down 0.35%. The Nasdaq futures fell 0.44%. On Wednesday, European stocks mostly traded on the lower side while Asian markets closed the day with solid gains.
On Tuesday, Wall Street closed with gains while the S&P 500 rose for the fifth trading session in six despite the Fed’s apparent moves towards stabilizing inflation, which currently stands at 40-year highs. The Fed raised rates by a quarter-point in the previous week and signalled another six might be on the way. The last half-point hike was in May 2000.
On the last check, the yield on the 10-year Treasury was at 2.36% but had previously been as high as 2.417% early Wednesday. However, the 10-year yield stood at 2.14% less than a week ago.
Mark Haefele, chief investment officer at UBS Global Wealth Management, was quoted saying, “While the increasingly hawkish tone of the Fed is unequivocally bad for bonds, the outlook for equities is more uncertain.”
Despite his statements, Haefele said that he still sees “a path to markets ending the year higher. Although there is widespread criticism, it’s too early to take the view that the Fed won’t be able to negotiate the fine line of reducing inflation without derailing growth.”
Wednesday was marked by other notable events as well, such as the rise in oil prices, with Texas Intermediate crude oil, the U.S benchmark, rising by 1.8% to $111.30 a barrel. In contrast, the international benchmark Brent crude was at $117.90 a barrel, a 2.1% rise. President Joe Biden and NATO allies are expected to announce additional sanctions that will be placed on Russia during their meeting in Brussels next week.
Below are some Wednesday stock moves.
GameStop (ticker: GME) was gaining in premarket trading by 10.4% to $135.89 following the move made by Chairman Ryan Cohen, where he bought 100,000 shares, increasing his holding to 11.9%.
Adobe (ticker: ADBE) witnessed a 3.3% drop to $451 after reporting better than expected earnings and weak estimates for the current quarter that fell short of Wall Street’s expectations.
Tesla (ticker: TSLA) dropped 1.2% to $981.65 in premarket trading. However, the stock spiked after news that the EV carmaker had opened its first European car factory in Germany.