US futures trade lower while global stocks rally

Bloomberg

Global stocks extended a rally as Federal Reserve officials cautioned against disruptive policy tightening and US companies signaled another strong earnings season. US index futures swung from gains to losses in line with volatile moves seen over the past several days.
Futures on the Nasdaq 100 Index were little changed, while those on the S&P 500 Index were 0.2% lower, after a two-day rally in New York led by dip-buying. A gauge of world stocks outside the US headed for the biggest two-day gains in almost three weeks. The dollar weakened, while Treasury yield curves flattened. Advanced Micro Devices Inc. rises in premarket trading amid expectations its results will show market-share gains.
Four Fed officials said they’ll back interest-rate increases at a pace that doesn’t disrupt the economy, calming markets unnerved by previous hawkish messages from the central bank. Investors are now debating whether the rally that pared the worst monthly rout in the S&P 500 since March 2020 will continue. They are also focusing on earnings releases to gauge the strength of the economic recovery.
“Good news is that some Fed officials are finally out trying to soothe investors’ nerves saying that they still want to avoid unnecessarily disrupting the US economy,” Ipek Ozkardeskaya, a senior analyst at Swissquote, wrote in a note. “But what will really make the difference is the quantitative tightening and given the steep rise in Fed’s balance sheet since March 2020, even halting the growth would be an abrupt change.”
Waves of volatility have swept across markets after the Fed signaled swifter monetary-policy tightening to curb inflation than many had expected. Investors need to “get used to this up and down volatility” as there’ll likely be more of it, Nancy Davis, chief investment officer at Quadratic Capital Management, said on Bloomberg Television.
Fed officials expressing caution over faster-than-necessary tightening included San Francisco Fed chief Mary Daly, who cited a number of risks facing the economy in addition to the ongoing pandemic, including headwinds as fiscal support fades. Kansas City Fed President Esther George also said it’s in “no one’s interest to try to upset the economy with unexpected adjustments.”
Meanwhile, the corporate-earnings outlook continues to underpin the case for stocks. Of the 174 companies in the S&P 500 that have reported earnings so far this season, 81% have beaten or met projections. Profits are coming in about 5.1% higher than forecast levels.
Treasuries erased their losses, with the 10-year rate shedding two basis points. In Germany, the benchmark yield returned to negative territory, while the two-year rate rose above the central-bank rate for the first time since 2015.
AMD advanced in early New York trading. The second-biggest maker of computer processors, will report quarterly results and provide its forecast for the year, giving investors a sense of whether the chipmaker can continue to make gains against larger rival Intel Corp. UBS jumped 6% in Zurich as earnings beat estimates.
Futures on the S&P 500 fell 0.2% as of 5:46 am New York time and futures on the Nasdaq 100 were little changed.
While futures on the Dow Jones Industrial Average fall 0.2%, the Stoxx Europe 600 rises 1.1% and the MSCI World index also climbs 0.3%.
The Bloomberg Dollar Spot Index falls 0.3% and the euro rises 0.2% to $1.1258.