Stock futures rose Wednesday evening to steady after dropping earlier, with investors assessing the latest headlines on the Omicron variant and mulling lingering concerns around inflation.
Contracts on each of the S&P 500, Dow and Nasdaq traded higher as the overnight session kicked off. The three major indexes slid during the regular trading day, after the Centers for Disease Control and Protection announced that the first confirmed case of the Omicron variant had been identified in the U.S. More than two dozen countries globally have so far found at least one confirmed case of the variant, first identified last week.
The latest updates on the virus front have come on top of traders' ongoing concerns over rising prices. Monetary policymakers have also underscored these lingering inflationary trends, stoking concerns that the Federal Reserve may soon pivot away from its accommodative policies that had helped support markets throughout the pandemic. In the Federal Reserve's December Beige Book, or collection of anecdotes about economic conditions throughout the Fed districts, the central bank said it observed that, "Prices rose at a moderate to robust pace, with price hikes widespread across sectors of the economy."
Federal Reserve Chair Jerome Powell also told lawmakers this week that he thought it would be appropriate for monetary policymakers to consider ending their asset-purchase tapering process sooner than previously telegraphed, or potentially before the middle of next year. That has in turn raised the specter that interest rate hikes could also come more quickly than previously anticipated after the conclusion of the Fed's tapering process.
According to a number of strategists, inflation — as well as policymakers' responses to inflation — will ultimately be one of the driving forces for the market going forward.
"In the very near-term the biggest threat is the headlines related to the virus," Niladri Mukherjee, Merrill and Bank of America Private Bank head of CIO portfolio strategy, told Yahoo Finance Live on Wednesday. "But as we go into 2022, inflation is the biggest risk for the markets as a whole. Inflation is looking awfully persistent. Obviously we had 6-7 months of CPI [the Consumer Price Index] printing above 5%, now 6%. I wouldn't be surprised to see even higher prints going into January, February, especially if the variant actually leads to further closures."
Story continues6:31 p.m. ET Wednesday: Stock futures recover some losses
Here were the main moves in markets during the overnight session:
S&P 500 futures (ES=F): +8.75 points (+0.19%), to 4,517.25
Dow futures (YM=F): +85 points (+0.25%), to 34,087.00
Nasdaq futures (NQ=F): +39.75 points (+0.25%) to 15,909.5
NEW YORK, NEW YORK – NOVEMBER 29: A trader works on the floor of the New York Stock Exchange (NYSE) at the start of trading on Monday following Friday’s steep decline in global stocks over fears of the new omicron Covid variant discovered in South Africa on November 29, 2021 in New York City. Stocks surged in morning trading as investors get more data on the new variant and reports that symptoms have so far been mild for those who have contracted it. (Photo by Spencer Platt/Getty Images)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter