U.S. stock futures were little changed in after-hours trading Wednesday following a turbulent earlier session that saw Wall Street’s main indexes claw back from daytime lows after minutes from the Federal Reserve’s latest meeting minutes came in clear of any mention the central bank would authorize a 50 basis point rate hike in March.
Futures tied to the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite were mostly flat heading into the overnight session after recovering some losses from their earlier drop midday Wednesday.
Insight into the Fed’s last policy-setting meeting served as relief for investors who in recent weeks have grappled with the prospect central bank officials could scale up their hiking cycle on a string of recent red-hot inflation prints and stronger-than-expected jobs data.
The minutes indicated policymakers were weighing a near-term increase on short-term borrowing costs and would determine the timing of their balance sheet reduction process at imminent meetings but did not suggest a 50 basis point hike was on their agenda.
“With markets signaling the Fed’s latency on monetary policy action is a growing concern, investors were looking for any clues in the Fed minutes that allude to more aggressive policy changes in the near future,” Allianz Investment Management senior investment strategist Charlie Ripley said in a note. “In markets, timing is everything, and the delayed reaction from the Fed has investors convinced that aggressive policy tightening is on the horizon.”
“While not offering much to change that view, the Fed minutes did indicate a faster pace of tightening relative to the last hiking cycle is warranted,” Ripley said. “On balance, there was nothing in the minutes that suggested the Fed would be more aggressive than what the market has already priced in.”
The latest clues on monetary policy plans come as traders weigh a fresh headwind from geopolitical tensions between Russia and Ukraine. Fears that the Kremlin would green light a move to force in on its neighboring country have mounted in recent weeks on existing central bank worries due to the potential of military action to exacerbate inflation and spur other economic disruptions.
Traders got temporary relief from a streak of volatility on Tuesday after Russia pulled some troops from the Ukrainian border and Vladimir Putin said he was open to security discussions with the West on negotiating the crisis. However, fears of aggression were renewed in Wednesday’s session after NATO officials accused Russia of continuing its military buildup.
“We have excellent intelligence and if the Russians in fact are removing those troops, we will see it,” John Ed Herbst, former U.S. ambassador to Ukraine, told Yahoo Finance Live on Tuesday.
“Moscow wants to de-escalate tensions,” he said. “I think Putin is afraid of the consequences of actually launching a major invasion of Ukraine.”
On the economic data front, investors digested a fresh print on U.S. retail sales, which jumped more than expected in January to recover from a December drop, with spending across a broad range of sellers rebounding at the start of the year. Investors will tune in Thursday for economic snapshots out of Washington on housing and employment, with building starts, housing starts, and initial jobless claims on the itinerary, among a lineup of other reports.
Earnings will also be front and center, with companies including retail heavyweight Walmart (WMT) set to report, alongside results from Shake Shack (SHAK), Roku (ROKU), and Dropbox (DBX), among others.