Dow Jones, S&P 500, Nasdaq likely to open lower as the market prepares for a bumpy ride

6.30am: Walt Disney and Uber report today 

Wall Street is expected to open lower as investors continue to digest comments from Federal Reserve Chair Jerome Powell that confirm further rate hikes lie ahead, while they also await earnings from the likes of Walt Disney and Uber. 

Futures for the Dow Jones Industrial Average (DJIA) fell 0.2% in Wednesday pre-market trading, while those for the broader S&P 500 index dropped 0.3%, and contracts for the Nasdaq-100 shed 0.2%.

In an interview at The Economic Club of Washington yesterday, Powell acknowledged that inflation has begun to decline but said interest rates would still have to rise as the Fed battles to return inflation to 2%. 

US stocks rallied towards the close, with the DJIA ending 0.8% higher at 34,157, the Nasdaq Composite closing 1.9% up at 12,114, and the S&P 500 gaining 1.3% to 4,164. 

“Investors appear a little relieved at Fed Chair Jerome Powell sticking to last week’s script despite Friday’s jobs report indicating that the labour market remains red hot,” commented Craig Erlam, senior market analyst at OANDA. “It would appear traders had become a little more defensive on the expectation of a hawkish shift but Powell refrained from taking the leap.”

Erlam noted that the market is getting a consistent message from policymakers across various central banks. While headline inflation is falling and will likely fall much further, core services inflation remains a big concern, and tight labour markets make achieving lower wage growth consistent with 2% inflation targets very difficult.

“It’s been clear for a while that the journey back to 2% was likely to be more treacherous than the path to peak inflation, and the data in the first quarter in particular, perhaps the second also, was going to highlight that,” he added. “Recent jobs reports alone have epitomized that and sentiment in the markets is likely to continue mirroring it in the coming months.”

Apart from Walt Disney and Uber, YUM! Brands, Fox Corp, MGM Resorts and Coty are among the company’s reporting quarterly earnings today.