The gains have come while traders await the conclusion of the final Fed meeting of 2023.
Stock futures in the United States climbed slightly higher on Tuesday, December 12, as investors await news on the Federal Reserve’s (Fed) policy. Futures on the Dow Jones Industrial Average (DIJA) climbed 0.11%, adding 42 points, while S&P 500 and Nasdaq 100 futures rose 0.11% and 0.18%, respectively.
The market expects the US’ apex bank to keep rates steady instead of a reduction or an increase. This means the interest rate will remain in the 5.25% to 5.5% range since it was increased from the 5% to 5.35% range in July. Regardless, investors hope that Fed Chair Jerome Powell’s commentary will contain some information on the near future of rates.
Potential Factors Capable of Influencing Fed Decision
It is also possible that the Treasury yields point the Fed to a decision as they fall and leave the job of tightening the economy fully on the Fed. For instance, the 10-year yield fell to 4.2% recently, compared with more than 5% in October. Referring to the yield, Charles Schwab Chief Investment Strategist Liz Ann Sonders said:
“[Powell] may hint [that it is] doing some of the prospective easing…That’s, to me, what I’m going to be focused on, is whether he short of does the opposite of what he did when he said that the move up in yields had done some of the tightening for the Fed.”
Another factor that could potentially influence the Fed’s decision on interest rates is the November producer price index expected today. According to economists surveyed by Dow Jones, a 0.1% rise is likely.
Stocks are already swinging, with a major fall recorded in Pfizer (NYSE: PFE). As of this writing, Pfizer has fallen 6.65% in premarket trading, hitting $26.68, below its previous close of $28.58. Pfizer’s plunge happened after it published a disappointing guidance for 2024, putting revenue between $58.5 billion and $61.5 billion. Unfortunately, even the upper limit of the range is below the expected $62.66 billion expected according to a StreetAccount consensus.
Tesla Inc (NASDAQ: TSLA) also fell, losing 1% in premarket trading, a likely response to news of the company recalling more than 2 million vehicles. After two years of crash investigations by the National Highway Traffic Safety Administration, Tesla is recalling these vehicles to fix a problem with its Autopilot. Reportedly, Tesla will release a software update to fix the issue.
Meanwhile, there is a significant increase in requests for refinancing in the US mortgage market. Likely due to a reduction in mortgage rates, applications recently increased by 14%. Mortgage rates fell towards the 7% mark, after climbing 8% earlier.
In other news, the Consumer Price Index for All Urban Consumers (CPI-U) rose slightly in November. The recorded 0.1% is also a 3.1% increase from the same period in 2022. However, it is a slight reduction from the 3.2% registered year-over-year in October. The data shows an increase in the shelter index, while the energy index fell by 2.3%.
