December 6, 2022

Stock futures rise as investors assess the prospect of higher interest rates

Stock futures rose on Friday as investors continued to evaluate earnings reports and dovish language from Federal Reserve speakers.

Futures for the Dow Jones industrial average rose 80 points, or 0.2%. S&P 500 futures rose 0.4%, while Nasdaq-100 futures advanced 0.5%.

Ross Stores and Palo Alto Networks popped up After both companies released their latest quarterly results. Investors also cheered Cap’s most recent results.

Friday’s moves came after a lower session on Wall Street after comments from Federal Reserve officials raised concerns about tighter US monetary policy.

St. Louis Federal Reserve President James Bullard said Thursday That “The policy rate is still not in the zone of being considered sufficiently constrained.” He suggested that the appropriate zone for the federal funds rate might be in the 5% to 7% range, which would be above the market price.

Investors have reacted in recent weeks to every new economic data or any language that could indicate what the Fed will do next with interest rates, said Shelby McFadin, investment analyst at Motley Fool Asset Management. At the same time, he said, comments on inflation led investors to believe the central bank did not think the economy had cooled sufficiently.

“There is a thirst for relief and a tug-of-war,” he said of investors’ response in recent days. “But at the end of the day, it really depends on whether this period of inflation turns into a slower deflationary one rather than a spike, and what the central bank decides to do next.”

Investors will look to existing home sales data on Friday for any sign of a cooling economy. Boston Fed President Susan Collins will speak in the morning.