Stock futures stabilized late Thursday after a rally on Wall Street, with all three major US stock indices closing sharply higher as investors pondered the way forward for interest rates and a series of new sanctions against Russia.
Contracts in the S&P 500 hugged the flat line. The S&P 500, the Dow Jones and the Nasdaq each closed the regular session on Thursday more than 1% higher. Despite some losses earlier this week, the S&P 500 and Nasdaq were headed for a second straight week of gains, if levels hold through Friday’s close.
Developments in Russia’s war in Ukraine remained in the spotlight Thursday as President Joe Biden met with NATO allies in Europe. the The United States imposed a new set of sanctions against Russia and promised to provide more aid to Ukraine. Biden also said that he would support Russia’s removal from the G20.
Despite the ongoing geopolitical conflict, stocks have remained relatively resilient this week on upbeat economic data and a chorus of comments from Federal Reserve officials reiterating the central bank’s more aggressive path to rein in inflation. In one of the latest data points to underscore the ultra-tight job market, weekly jobless claims set lowest level since 1969 last week, when companies kept their existing workers amid widespread labor shortages.
In this context, and with inflation at the highest level in 40 years, central bankers have intensified talks about tightening monetary policy. Chicago Federal Reserve Chairman Charles Evans he said Thursday that he was “open” to the notion of a 50 basis point interest rate hike at an upcoming Fed meeting if necessary. This echoed comments from other Fed policymakers, including San Francisco Fed President Mary Daly, who said earlier this week that if the Fed needed to do 50 basis points, then “50 is what we’ll do.” Fed Chairman Jerome Powell earlier this week he also signaled a willingness to implement a 50 basis point higher rate hike than typical to deal with inflation, if deemed necessary.
While the prospect of higher interest rates and tighter financial conditions was met with dismay among investors and nervousness in markets earlier this year, traders have begun to digest the prospect of a more aggressive Fed. Still, some strategists warned that volatility would likely still be on the cards in the short term.
“We’re still pretty bullish on the market overall, but I think the volatility is here to stay,” said Ross Mayfield, investment strategy analyst at Baird. he told Yahoo Finance Live on Thursday.
“As far as catalysts, there’s a lot of things out there. There’s a war going on in the Ukraine. The market isn’t moving as much in the daily headlines there, but that doesn’t mean there can’t be a big catalyst of that event yet, either.” up or down,” Mayfield added. “The Fed: We have a pretty good picture of what they plan to do, but any hints as we get closer to May about 50 basis point rate hikes or balance sheet shrinking or what that might look like could be a catalyst.”
Others offered a similar take.
“There’s been quite a bit of bearish sentiment. We see money managers having excess cash, more than normal, almost 6% on average in cash,” Loreen Gilbert, CEO of WealthWise Financial, told Yahoo Finance Live. “I don’t think the volatility is over. While we’re happy with some good market bounces to the upside, we’re also looking to see what happens in the future.”
Thursday at 6:10 p.m. ET: Equity Futures Open Little Changed
Here’s where the major stock index futures opened on Thursday night:
S&P 500 Futures (EN=F): +2.25 points (+0.05%) at 4,514.75
dow futures (YM=F): +31 points (+0.09%) at 34,635.00
Nasdaq futures (NQ = F): -2.75 points (-0.02%) to 14,761.00
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter