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Jan-27, 2022, US stock and Economical Updates, By Forex Forum
U.S. futures fluctuated as dip buyers returned after a selloff sparked by a hawkish Federal Reserve.
Contracts on the S&P 500 and Nasdaq 100 drifted lower, whipsawing after erasing losses earlier. In Europe, tech and travel stocks dragged down benchmark indexes, while bank shares rallied after Deutsche Bank AG raised its outlook.
Futures on the Dow Jones, S&P 500, and Nasdaq each dipped 0.3% as of 4:10 a.m. ET, suggesting a lower start for US indices later in the day.
Source: bloomberg.com/new
In its policy update Wednesday, the US central bank said it would "soon" be appropriate to raise interest rates and reiterated plans to end bond-buying in March. This, analysts said, is a sign the economy is ready for a change.
"Change can be scary. And this market has sensed that the ground is shifting under our feet," Callie Cox, an investment analyst at eToro, said. "However, the market has braced for big and fast rate hikes, and it looks like the Fed's approach will be more flexible instead of dramatic."
Europe's Stoxx 600, which includes companies from 17 countries, dropped 0.2% in early trading. Most major European indexes lost ground, but the United Kingdom's FTSE 100 (UKX) bucked the trend, rising 0.4%.
The declines come after Federal Reserve Chairman Jerome Powell signaled that the Fed is preparing to raise interest rates at its meeting in March. Powell also indicated during a press conference that rates could climb more quickly than many analysts had anticipated.
The Fed boss said that the US economy and labor market are strong enough to tolerate higher rates, which are needed to reduce inflation. Analysts at BNP Paribas, who had expected the central bank to raise interest rates four times this year, revised their estimate to six hikes after Powell spoke to reporters.
"Chair Powell refused to be dragged in a debate on the likely pace and extent of rate hikes, but we read these comments as an indication the Fed's bias is for more frequent hikes than we had anticipated," BNP Paribas analysts told clients.
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