Stock futures rise slightly on Friday, but head for a losing week on Fed angst

US stock futures edged higher on Friday, but the market headed for a losing week as investors braced for monetary policy tightening from the Federal Reserve.

Futures on the Dow Jones Industrial Average climbed 130 points, or 0.4%. S&P 500 and Nasdaq 100 futures were slightly higher.

Despite a slight rebound on Thursday and early gains on Friday, the major averages were heading for weekly declines. The S&P 500 and Nasdaq were down 1% and 2.6% respectively for the week though Thursday’s close. The Dow was down 0.7% since the start of the week. The losses would mark the first weekly losses for the S&P 500 and Nasdaq in four weeks. Meanwhile, the Dow is heading for back-to-back weekly declines.

The losses were driven by a change in tone from the Federal Reserve, signaling that it will be even more aggressive in tackling inflation. On Wednesday, the central bank released the minutes of its March meeting, revealing that policymakers plan to cut their bond holdings by a consensus amount of about $95 billion a month. The minutes also indicated potential interest rate hikes of 50 basis points at future meetings. One basis point equals 0.01%.

This follows strong comments from Fed Governor Lael Brainard earlier in the week, who said the central bank could start shrinking its balance sheet at a “rapid pace” as early as May.

The Fed’s pivot pushed rates higher. The 10-year Treasury yield hit a new three-year high overnight Friday, rising above 2.69%. The rate ended last week at 2.38% and started the year at 1.63%.

“The unusually rapid bull cycle indicates that, in retrospect, the Fed (and most economists)
the ‘transitional inflation’ rhetoric was overly optimistic and now the Fed needs to aggressively catch up
after falling behind the curve,” wrote Maneesh Deshpande, head of US equity strategy at Barclays. “We remain cautious and believe the upside is limited.”

CNBC Pro Stock Picks and Investing Trends:

Tech stocks led the losses this week as investors dump riskier stocks in anticipation of higher interest rates hurting the group’s future earnings growth. Nvidia and Tesla are in the red for the week.

On the economic front, the wholesale inventories report will be released Friday at 10 a.m.

Investors are also eagerly awaiting earnings season, which kicks off next week with reports from five major banks. JPMorgan will report before the bell on Wednesday. Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo will report before markets open Thursday.

The Dow rebounded on Thursday after two straight days of losses, ending the day up 0.25% after losing as much as 300 points earlier in the session. The S&P 500 and Nasdaq also closed higher for the day.

“We’re in a trading range market and will be that way for a while,” Stephanie Link, chief investment strategist and portfolio manager at Hightower, told CNBC’s “Closing Bell.” “And it’s really because we have so many unknowns to deal with.”

Stock futures rise slightly on Friday, but head for a losing week on Fed angst

Source link Stock futures rise slightly on Friday, but head for a losing week on Fed angst

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