The S&P 500 and the Dow were poised for a subdued open on Friday after comments from a U.S. Federal Reserve official dampened recent upbeat sentiment.
New York Fed President John Williams said in a CNBC interview it was “premature” to think about interest rate cuts.
The Fed left interest rates unchanged on Wednesday, acknowledging slowing inflation and indicated lower borrowing costs were on the horizon, causing the Dow Jones Industrial Average to notch its second straight record high close on Thursday.
Money markets now see a 64.3% chance of at least a 25-basis point rate cut as soon as March 2024, down from nearly 80% before the interview, while still pricing in a 91% chance of another cut in May 2024, according to CME Group’s FedWatch tool.
“It’s not unusual for Fed speakers to try to walk back outsize reactions to any particular Fed meeting, whether positive or negative,” Art Hogan, chief market strategist at B Riley Wealth, said.
Despite session’s move, the dovish turn of events this week caused equities to rally, with the benchmark S&P 500 eyeing its longest weekly winning streak since September 2017.
U.S. Treasury yields fell below 4% to multi-month lows, with yield on the benchmark 10-year Treasury note last standing at 3.9502%.
Markets will now parse the S&P Global Composite Flash PMI data for December, due after the opening bell.
Meanwhile, the expiry of quarterly derivatives contracts tied to stocks, index options and futures, also known as “triple witching”, later in the day could potentially stoke market volatility, although stock swings have been muted recently.
At 8:57 a.m. ET, Dow e-minis were up 4 points, or 0.01%, S&P 500 e-minis were down 1.75 points, or 0.04%, and Nasdaq 100 e-minis were up 27 points, or 0.16%.
Among stocks, General Electric gained 1.4% before the bell after Wells Fargo upgraded the industrial conglomerate’s shares to “overweight” from “neutral”.
Costco Wholesale rose 2% after the retailer topped Wall Street estimates for first-quarter results due to demand for cheaper groceries.
Darden Restaurants slipped 1.9% after the Olive Garden owner forecast annual same-store sales below estimates.
First Solar and Enphase Energy added 2.5% and 2.6%, respectively, as Jefferies started coverage of the solar companies with a “buy” rating.
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