U.S. stock futures could see limited movements before Jerome Powell’s intervention today.
Markets have been reacting to the comments from other Federal Reserve governors which introduced some uncertainty about future monetary policy moves. Traders could also be more cautious following the S&P 500 and Nasdaq indices rebounds.
Monetary policy expectations continue to point toward an end to the interest rate hike cycle, although some doubts remain over a possible additional increase this year and over the start of rate cuts next year.
Additionally, US treasury yields remained on a downtrend overall since reaching a peak last month. The trend could support appetite for riskier assets and could push the stock market to the upside.
Positive company earnings could also support a more optimistic sentiment among investors, helping maintain the market’s rebound. However, the main indices could find some resistance near their previous peaks.
The banking sector could gradually come under pressure over the longer term as lower interest rates could weigh on banks’ margins.
At the same time, the currently restrictive monetary policy could continue to affect the economy and the job market, potentially impacting banks’ revenue.
Energy stocks lagged the rest of the market, dropping significantly in reaction to the sliding oil prices. Conversely, technology stocks outperformed, rallying for over a week, spurred by a risk-on attitude and hopes for a shift in monetary policy.