Dow futures swing higher as markets grapple with uncertainty over interest rates and Omicron

US stock futures pointed to a stronger start on Thursday, in what has become an increasingly volatile market due to uncertainty over the spread of the coronavirus and the direction of interest rates.

What is happening
  • Futures contracts on the Dow Jones Industrial Average
    YM00,
    + 0.77%

    327 points rose 1% to 34,329

  • Futures contracts on the S&P 500
    ES00,
    + 0.60%

    It rose 0.8%, or 37 points, to 4,546

  • Nasdaq 100 futures contracts
    NQ00,
    + 0.34%

    It rose 0.7%, or 105 points, to 15974

In an incredibly volatile session on Wednesday, the Dow Jones Industrial Average
DJIA,
-1.34%

It ended 1.3%, or 462 points, down to 3,0422.04 as the Nasdaq Composite declined
COMP,
-1.83%

1.8%, or 284 points, to 15,254.05. S&P 500 . Index
SPX,
-1.18%

It fell 1.2% to 4513.04, small capital Russell fell 2000
rut,
-2.34%

It fell 2.3 percent, or 51 points, to 2,147.42 points.

What is driving the markets

Market sentiment was soured on Wednesday after the confirmation of the first case of the US omicron variable, which sent the S&P 500 index below its 50-day moving average for the first time since October 13.

“It appears that the main concern for investors remains the uncertainty surrounding the Omicron coronavirus variant and the implications any new restrictions may have on the global economy,” said Charalambos Pissouros, head of research at JFD Group.

It also came as Federal Reserve Chairman Jerome Powell, for a second day, raised the possibility of a faster gradual cut, which in turn would pave the way for further, faster rate increases.

“It’s not about the virus; it’s about the Fed and what they plan to do. This sale is going to get worse; that’s going to be about how much pain the Fed can take,” said Michael Kramer, CEO of Mott Capital Management.

What is clear is that the once-tracked markets are now increasingly volatile. Analysts at Bespoke Investment Group have found 17 cases since 1928 where there were three drops of at least 1%, and one gain of at least 1%, in the four days leading up to closing below the 50-day average. The average gain within a year was 16%, although there were drops of 40% in 2007 and 23% in 1934.

Four Federal Reserve officials are scheduled to speak Thursday, as the latest jobless claims report is released. The OPEC+ group will also discuss production policy in response to the virus.

.

Leave a Reply

Your email address will not be published.