Stock futures were flat as investors weighed the central bank’s next policy move

Traders on the floor of the NYSE, October 12, 2022.

Source: NYSE

Stock futures rose on Monday as investors weighed a possible slowdown or pause from the Federal Reserve.

Futures linked to the Dow Jones industrial average rose 75 points, or 0.22%. S&P 500 futures rose 0.15%, while the Nasdaq 100 added 0.2%.

On Friday, the major averages rallied to close the week after briefly losing momentum from the January rally. The Nasdaq posted a small gain for the week. However, the Dow and S&P each lost their own weeks. All major averages are in green for the month. Nasdaq leads the pack with a year-to-date gain of 6.44%.

Investors are weighing the possibility that the central bank is preparing to slow the pace of its inflation-fighting rate hikes after economic data showed last week. Decline in wholesale prices and retail sales.

On Friday, investors picked up on Fed Governor Christopher Waller’s comments to favor a quarter-percentage-point rate hike at the next meeting. A The Wall Street Journal reports Sunday, meanwhile, raised the possibility of a spring pause in rate hikes — a sign that the central bank is nearing the end of its rate hike campaign.

“As investors grow more confident on the inflation side, it is clear that they are now looking beyond the current hiking cycle and eventually a pause and possible line cut,” Deutsche Bank strategist Henry Allen wrote in a note to clients on Monday. “But with investors now priced in for good news on inflation, the risk is that if inflation continues to hold, we could have another bear market rally like we saw last summer.”

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Markets They have fixed the price 99.7% chance of a 25-basis point hike, according to CME Group DataThis will bring the interest rate to the target range of 4.5%-4.75%.

There are no speeches by central bank officials on the calendar ahead of the central bank’s policy meeting on January 31 and February 1. However, investors will monitor another set of economic data, including the central bank’s preferred inflation measure, the consumer price index. , out on Friday.

Meanwhile, earnings reports Can keep the market on edge, about 40% of the Dow are scheduled to release their latest financial results and provide additional insight into how companies are coping with inflation and interest rates. Microsoft, IBM, Tesla, Visa and MasterCard are some of the big names on deck.

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