Modupe Gbadeyanka
By Investors Hub
The major U.S. index futures are pointing to a modestly higher opening on Wednesday, with stocks poised to regain some ground following the sell-off seen in the previous session.
Traders may pick up stocks at somewhat reduced levels following the pullback seen on Tuesday, which came on the heels of two-day rally.
Stocks came under pressure over the course of the trading day on Tuesday after initially showing a lack of direction. The pullback on the day came after the major averages moved sharply higher over the two previous sessions.
The major averages ended the session at their worst levels of the day. The Dow tumbled 299.24 points or 1.2 percent to 25,410.03, the Nasdaq slumped 91.11 points or 1.2 percent to 7,330.35 and the S&P 500 plunged 35.32 points or 1.3 percent to 2,744.28.
Renewed interest rate concerns contributed to the pullback by stocks, as traders kept a close eye on new Federal Reserve Chairman Jerome Powell’s testimony before the House Financial Services Committee.
Powell’s remarks before the committee were interpreted by some as indicating that the Fed may raise rates more than the three times currently anticipated.
In response to a question, Powell noted that incoming data has suggested a strengthening in the economy since the median forecast called for three rate hikes at the December meeting.
“We’ve seen some data that in my case will add some confidence to my view that inflation is moving up to target,” Powell said. “We’ve also seen continued strength around the globe. And we’ve seen fiscal policy become more stimulative.”
He added, “So, I think each of us is going to be taking the developments since the December meeting into account and writing down our new rate paths as we go into the March meeting.”
The new Fed Chief stressed that he did not want to prejudge the new set of projections, but his comments still raised concerns about four rate increases this year.
In his prepared remarks, Powell reiterated the Fed’s view that further gradual increases in interest rates will best promote attainment of both of the central bank’s dual objectives.
Powell also said financial conditions remain accommodative despite recent volatility and highlighted strong consumer spending and job growth.
With the focus on Powell’s congressional testimony, traders largely shrugged off a mixed batch of economic data.
While the Commerce Department released a report showing a bigger than expected drop in durable goods orders in January, the Conference Board’s consumer confidence index jumped more than expected in February.
Gold stocks moved sharply lower on the day, dragging the NYSE Arca Gold Bugs Index down by 2.8 percent. With the drop, the index ended the session at its lowest closing level in over a year. The weakness in the gold sector came amid a steep drop by the price of the precious metal.
Significant weakness was also visible among interest rate-sensitive real estate stocks, as reflected by the 2.2 percent loss posted by the Dow Jones U.S. Real Estate Index.
Transportation, natural gas, and housing stocks also saw considerable weakness, moving lower along with most of the other major sectors.
