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Stock index futures pointed to a mixed open Thursday, with growth names outperforming following the big post-Fed surge.
Nasdaq 100 futures (NDX:IND) +1.7% lead the way higher on the backs of Meta’s rally, with S&P futures (SPX) +0.7% up and Dow futures (INDU) -0.1% lower.
“Fed Chair Powell offered a confused set of signals, even by the confused standards of Powell’s ordinary commentary,” UBS” Paul Donovan wrote. “For instance, rates would continue to rise but the Fed was not going to challenge the markets’ dovish expectations. Since the June policy errors trashed forward guidance, markets have been inclined to emphasize the Fed’s actions rather than words.”
The Fed statement pointed to further increases, plural, but the markets are skeptical. Fed funds futures price in a 14% the Fed won’t hike in March, that rises to 87% that tightening is done by the May meeting. Looking to the end the of year and the market says it’s more likely than not rates are lower than they are today.
Attention will stay on central banks in premarket. The Bank of England boosted its rate to 4% from 3.5%, as expected. But it also indicated a pause could be coming.
In other central bank news, Christine Lagarde and the ECB raised rates by 50 basis points and expects to increase rates again in March. The Governing Council raised interest rates on its main refinancing operations to 3.00%, on its marginal lending facility to 3.25%, and on its deposit facility to 2.50%.
Rates are lower after yesterday’s tumble. The 10-year Treasury yield (US10Y) dipped 4 basis points to 3.35% and the 2-year yield (US2Y) slid 6 basis points to 4.05%.
On the economic calendar, weekly jobless claims fell unexpectedly by -3K to 183K compared to the forecasted 200K figure.
At the same time, Q4 productivity and unit labor costs came in. Labor costs came in at +1.1% versus the anticipated +1.5% data point. While productivity costs increased +3% versus the forecasted +2.4%.
Among active stocks, all eyes are on Meta’s (META) giant post-earnings gains.
“The market, which has its eyes firmly on the future, has clearly priced in a rebound of Meta’s advertising revenues. With peak inflation coming into view, and the recovery lane for the economy well signposted, there’s cautious optimism Meta can prove its bulls right,” Hargeaves Lansdown analyst Sophie Lund-Yates said.
“Overall, there are thus some signs of improvement when it comes to margins and profitability, but I still believe that the company clearly has a lot of work to do in this area, and some investors will likely remain on the sidelines until they see a clear improvement in Meta’s actual reported results – so far, these improvements are only seen in forward-looking and thus somewhat uncertain statements,” SA contributor Jonathan Weber wrote.
Stanley Black & Decker (SWK) is slumping on weak guidance.
