U.S. stock futures were flat in overnight trading as investors await clarity on the state of the economy and further stimulus from the Federal Reserve’s policy meeting.
Dow futures rose 42 points, indicating a gain of 0.2% at the open Wednesday. The S&P 500 and Nasdaq were also set to open slightly higher, with gains of 6 points and 30 points, respectively.
The Dow Jones Industrial Average and S&P 500 were under pressure on Tuesday as stocks benefiting from the economic reopening fell broadly. The Dow fell 300 points or 1.1%, snapping a 6-day winning streak. The 30-stock average was dragged down by a 5.9% drop in Boeing.
The S&P 500 lost 0.8%, retreating after briefly turning positive for the year in the previous session.
“After such a ferocious run in recent weeks, the stock market was overdue for a correction or at least a pause,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. “Upside price momentum was becoming extreme and sentiment indicators a bit too bullish. Profit-taking won over today, particularly in those economically-sensitive area which have done the best in recent weeks.”
The Nasdaq Composite was the outperformer, closing at an all-time record high, as investors piled back into technology darlings. The index jumped 0.3% on Tuesday.
Big gains in Facebook, Amazon Apple, Netflix and Google-parent Alphabet pushed the tech-heavy Nasdaq Composite over the 10,000 threshold for the first time ever; however, it closed below this level.
“Being overweight stocks most sensitive to an economic revival worked well in recent weeks but not earlier in the year and not today,” added Paulsen. “Alternatively, owning high-growth, new-era stocks worked well earlier in the year and did very well today but not in the last couple weeks.”
The Federal Open Market Committee started its two-day meeting Tuesday with markets watching for news on several fronts.
The central bank is unlikely to make any major policy changes, with its benchmark rate near zero and the asset purchasing programs continuing. However, investors will be watching for thoughts on possibly implementing yield caps and strengthening forward guidance on how long the Fed will keep current policies in place.
The meeting concludes Wednesday with the release of a policy statement and the quarterly summary of economic projections, then Chairman Jerome Powell’s news conference at 2:30 pm EST.
The Fed will be revealing its first forecast for the economy and interest rates since late last year, as it skipped a forecast in March just as the pandemic forced the abrupt shutdown of the economy.
— with reporting from CNBC’s Jeff Cox.
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