Stock futures edged higher Thursday evening after closing lower during the regular trading day, as jitters over the prospects of less accommodative monetary policy compounded with fresh geopolitical concerns.
Contracts on the S&P 500 ticked up. Earlier on Thursday, the index closed lower to end a five-session winning streak and pull back from an all-time high. Both the Dow and Nasdaq had also ended in the red.
More hawkish commentary from Fed policymakers ahead of the central bank’s key Jackson Hole symposium on Friday knocked stocks from their upward trajectory earlier this week, and compounded with concerns over the crisis in Afghanistan after explosions at the Kabul airport injured and killed U.S. service members.
Federal Reserve Bank of Kansas City President Esther George told Yahoo Finance’s Brian Cheung she would prefer to begin removing monetary policy accommodation and begin tapering asset purchases “sooner rather than later” as the economy continues to recover. George serves as an alternate voting member of the Federal Open Market Committee this year, and will be a voting member next year.
Federal Reserve Chair Jerome Powell’s Jackson Hole speech on Friday is set to provide a fuller picture of the central bank leader’s thinking about the pace of the economic recovery in light of the latest Delta variant threat. Despite comments from more hawkish Fed officials lately, Powell’s remarks have to date been more dovish, suggesting he was more inclined to wait to see the further progress made in the economy before adjusting policy.
"We're not expecting a formal definitive announcement tomorrow, given the deterioration in the macro landscape since that July meeting, when the taper debate really unfolded," Candice Bangsund, Fiera Capital Global Asset Allocation vice president and portfolio manager, told Yahoo Finance.
"Obviously, the Delta variant [is] a major downside risk bringing into question the outlook for the economy, and clouding the outlook," Bangsund added. "So we think this will see Chair Powell tomorrow take somewhat of a cautious and patient approach – not providing that definitive guidance, but laying the groundwork for an eventual taper later this year once the Fed can get a little bit more of a sense as to the economic outlook, given these developments on the COVID front."
Even given Thursday’s pullback, the S&P 500 has managed to hold near all-time highs, boosted by a bevy of stronger-than-expected second-quarter earnings results, solid economic data, and still-accommodative policies from the Fed. The index has so far risen 19% for the year-to-date, and is on track for a nearly 2% gain in August.
“One has to be careful about focusing on issues over the short term over volatility and really getting swayed from making proper long-term decision,” Steven Wieting, Citi Global Wealth chief investment strategist, told Yahoo Finance. “Generally speaking, for example, a market that’s fallen 20% is going to generate higher returns than a market that’s rallied 20%. And this conundrum is always with us: We really feel better about markets that have performed well … but they’re really areas where you have to really reestimate what the future returns will look like.”
6:38 p.m. ET Thursday: Stock futures edge up
Here's where markets were trading Thursday evening:
S&P 500 futures (ES=F): +3.5 points (+0.08%) at 4,470.00
Dow futures (YM=F): +28 points (+0.08%) to 35,188.00
Nasdaq futures (NQ=F): +13.25 points (+0.09%) to 15,288.00
NEW YORK, NEW YORK – AUGUST 10: People walk by the Fearless Girl statue outside of the New York Stock Exchange (NYSE) on August 10, 2021 in New York City. Markets were up in morning trading as investors look to a rare bipartisan effort in the Senate to pass a massive infrastructure bill that, if passed, will infuse billions into the American economy. (Photo by Spencer Platt/Getty Images)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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