Dow Futures Rise After Fed Rally Fizzles — and What Else Is Happening in the Stock Market Today

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A trader works on the floor of the New York Stock Exchange.

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Stock futures were rising Friday, suggesting Wall Street would recover some of the losses from Thursday’s rout that pushed the S&P 500 down to levels not seen since December 2020.

Contracts linked to the Dow Jones Industrial Average rose 195 points, or 0.7%, to 30,114, S&P 500 futures were up 0.7% and Nasdaq futures gained 1%. 

Stocks slumped sharply Thursday, with the Dow closing below 30,000 and the S&P 500 slumping 3.3%, as markets worried the Federal Reserve’s latest interest rate increase of 0.75 a percentage point, and its plans for further aggressive rate hikes, could drive the economy into a recession.

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The Bank of Japan maintained ultra-low interest rates on Friday, in contrast to the Fed, and the Swiss National Bank and the Bank of England, which lifted rates on Thursday in moves to tame inflation.

Jeffrey Halley, senior market analyst at Oanda, said it was probably the move from the Swiss National Bank “that broke the camel’s back because if the Swiss are worried about inflation, we all should be.”

Halley said even the most ardent buy-the-dip equity investors have started to realize that inflation is a threat, “with central bank banks prepared to hike the world into a slowdown and possible recession to get on top of it.”

The analyst said Wall Street was pivoting away from equities for “tasty” government bond yields. The 10-year Treasury yield was at 3.237% early Friday.

Richard Saperstein, chief investment officer of Treasury Partners in New York, said his firm lately has been buying short-term Treasuries in an effort to temporarily park liquidity as rates rise. “At some point in the cycle, we expect to draw this liquidity to take advantage of fixed-income opportunities,” he added.

Write to Joe Woelfel at joseph.woelfel@barrons.com