U.S. Stocks Open Cautiously Higher Following Fed Chair Powell’s Remarks

U.S. stock index futures were trading modestly higher on Wednesday, March 8, after markets digested the latest hawkish comments from Fed Chair Powell the day before. Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) were up 0.05%, 0.06%, and 0.09%, respectively, at 5:00 a.m. EST.[0]

On Wednesday, U.S. stocks opened with a cautious increase following the sell-off the day prior, which had been caused by Powell's comments. The Nasdaq 100 (NDX) and the Dow Jones Industrial Average (DJIA) were up 0.1% and 0.08%, respectively, while the S&P 500 (SPX) declined by 0.02%, at 9:30 a.m. EST.[0]

A Beige Book survey by the Federal Reserve revealed that the overall U.S. economy had improved slightly at the outset of 2023, while inflationary pressures were still notable in many Federal Reserve Districts, though prices had leveled off in many of them.[1]

Meanwhile, job openings in the U.S. fell in January to 10.8 million from 11.2 million in December, the Labor Department said.[2] The large quantity of available jobs indicated that the labor market was still highly robust.[3]

At the Senate Banking, Housing, and Urban Affairs Committee, Powell suggested that higher interest rate hikes may be necessary in order to contain the persistent level of inflation.[4] The markets are now taking into account a 0.5% rate increase that will be decided upon during the Federal Open Market Committee (FOMC)'s meeting, slated for March 21-22, 2023, after the speech.[0] The anticipated terminal rate for the market has risen to a range of 5.50%-5.75%.[0]

The Treasury yields continued to advance following a surge a day earlier, with the 2-year Treasury yield nearly hitting 5.1% on the day, the highest level since 2007.[5]

In heavy trading, Shoals Technology (SHLS) dropped 8.6% after the solar firm announced a secondary offering of 24.5 million shares of common stock at a price of 24.70 each.[6] SHLS stock fell below the offering's price after the move.[1]

In pre-market trading, Occidental Petroleum (OXY) saw a rise of over +2% following a regulatory filing revealing Berkshire Hathaway's purchase of 5.[6]

0. “Stock Market News Today – Indices Finish Mixed as Investors Weigh Economic Data” TipRanks, 8 Mar. 2023, https://www.tipranks.com/news/stock-market-news-today-futures-inch-higher-after-digesting-powells-hawkish-tone

1. “Stock Market Closes Mixed; Beige Book Data Shows Resiliency” Investor's Business Daily, 8 Mar. 2023, https://www.investors.com/market-trend/stock-market-today/stock-market-volatile-on-powell-comments-jack-daniels-parent-stock-sells-off

2. “Stock Market Today: Stocks Choppy After Strong Jobs Data” Kiplinger's Personal Finance, 8 Mar. 2023, https://www.kiplinger.com/investing/stocks/stock-market-today-030823-stocks-choppy-after-strong-jobs-data

3. “Dow ends slightly lower, stocks finish mixed as higher Fed rate risk, upcoming jobs data worry Wall Street” MarketWatch, 8 Mar. 2023, https://www.marketwatch.com/story/u-s-stock-futures-unable-to-rebound-from-latest-sell-off-as-more-powell-talk-looms-8c9714e9

4. “Dow Industrial Average moves back to negative on the year” ForexLive, 7 Mar. 2023, https://www.forexlive.com/technical-analysis/dow-industrial-average-moves-back-to-negative-on-the-year-20230307

5. “Dow, S&P 500, Nasdaq end mixed as Wall Street processes ‘higher for longer Fed stance” Seeking Alpha, 8 Mar. 2023, https://seekingalpha.com/news/3945599-dow-sp-500-nasdaq-end-mixed-as-wall-street-processes-higher-for-longer-fed-stance

6. “Markets Today: Stock Indexes Slightly Higher as Bond Yields Fall” Barchart, 8 Mar. 2023, https://www.barchart.com/story/news/14882609/markets-today-stock-indexes-slightly-higher-as-bond-yields-fall

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