U.S. stock index futures fell early in the first hour on Wednesday after major averages jumped to normal trading hours, trying to recover some losses after weeks of sales.
Dow Jones Industrial Average futures contracts fell 475 points or 1.55%, while S&P 500 futures fell 1.25%. Nasdaq 100 futures fell 1.28%.
During the usual trading on Tuesday, the Dow rose 641 points, or 2.15%. The S&P 500 added 2.45%, making it its best day since May 4th. The jump comes after the benchmark index fell 5.79% last week to its worst weekly performance since March 2020.
The Nasdaq Composite was up 2.51% on Tuesday, after its tenth week of losses in the last 11 weeks.
Growing fears that the economy will fall into a recession have recently weighed on stocks. The Federal Reserve raised interest rates last week by a quarter of a percentage point, the largest increase in central bank rates since 1994.
The move came as the Fed is trying to cool inflation, which has risen to a 40-year high.
“We don’t see an American or global recession on the 22nd or 23rd in our base case, but it’s clear that the risks of a strong landing are increasing,” UBS said in a note to clients on Tuesday.
“Even if the economy falls into a recession, however, it should be shallow given the strength of the balance sheets of consumers and banks,” the firm added.
CNBC Pro Stock Selection and Investment Trends:
Goldman Sachs, meanwhile, believes a recession is increasingly likely for the U.S. economy, saying the risks of a recession are “higher and more frontal.”
“The main reasons are that our benchmark growth trajectory is now lower and that we are increasingly concerned that the Fed is forced to respond strongly to high general inflation and consumer inflation expectations if energy prices rise further, even if activity slows sharply. ” the company said in a note to customers.
Tuesday’s rally raises the question of whether the action is a short-term relief after weeks of selling or a significant change in sentiment. Tuesday’s force was wide. The 11 S&P sectors made gains during the day, with energy leading the way, up 5.8%.
“Our expectations are that market volatility is likely to persist in the short term until the actions taken by the Federal Reserve so far … and the actions it takes in the future have had time to work with the system,” Oppenheimer said. on Tuesday in a note to customers. .
Fed Chairman Jerome Powell will appear before Congress on Wednesday, beginning two days of testimony. In terms of earnings, KB Home will post results after the market closes on Wednesday.