Traders on the NYSE floor, June 3, 2022.
Source: New York SE
Stock futures were little changed in Sunday night trading after a losing week as investors continued to bet the Federal Reserve will aggressively tighten monetary policy to combat rising inflation.
Futures on the Dow Jones Industrial Average gained 30 points. S&P 500 futures and Nasdaq 100 futures were both flat.
The overnight action followed another disappointing week for investors as the major averages suffered modest losses. The blue-chip Dow is down 0.9% in its ninth negative week in 10, while the S&P 500 and Nasdaq Composite are down 1.2% and 1%, respectively, in their eighth week of losses in nine last week.
Investors have grappled with fears that the central bank could raise interest rates too quickly and too much, triggering a recession. Recent statements by Fed rate-setting members suggest that rate hikes of 50 basis points — or half a percentage point — are likely at the June and July meetings.
The US economy added 390,000 jobs in May, which performed better-than-expected despite fears of an economic slowdown and amid soaring inflation. Some investors believe the Fed’s strong hiring data could pave the way for it to remain aggressive.
“Right now, the market is seeing a Federal Reserve trying to walk down a painful and bumpy road, but still trying to find a gentle way out,” said Quincy Krosby, chief equity strategist at LPL Financial. “And the market is caught between wanting to believe in the rallies but not wanting to believe that the Fed can negotiate a soft landing.”
Investors will focus on the May consumer price index, which is due to be released on Friday morning. The headline inflation gauge is expected to be only marginally cooler than April, which could be interpreted by some as confirmation that inflation has peaked.
The stock market had a volatile year, with major moving averages falling in double digits from their record highs. The S&P 500 is down 14.7% from its all-time high hit in January. The stock benchmark briefly dipped into bear market territory last month.
“The second half of 2022 will be a roller coaster ride for investors unless the Fed can get inflation under control without a hard landing,” said Peter Essele, head of portfolio management at the Commonwealth Financial Network. “Most investors appear to be betting on a crash and burn scenario right now as recession fears abound and equity markets lack positive momentum.”