Market Update: Stock Futures Drop Following a Week of Losses for S&P and Dow Jones. Here’s the Latest News for Tuesday, February 21, 2023.

On Tuesday, February 21, 2023 at 2:00 PM GMT+3, U.S. stock futures were down to start a busy holiday-shortened trading week, filled with Federal Reserve meeting minutes, retail earnings, and an important inflation reading. The S&P 500 and Dow Jones Industrial Average futures fell by 0.7% and roughly 200 points, or 0.6%, respectively, while the Nasdaq Composite contracts were down 0.9%. Investors were evaluating quarterly financials from Walmart and the Home Depot, set to be released before the bell, for updates on the health of the U.S. consumer. Treasury yields rose, the U.S. dollar climbed higher, and WTI crude futures gained 0.9%. Later in the week, minutes from the Federal Open Market Committee’s last meeting and the Personal Consumption Expenditures (PCE) price index will be released, providing insight into the future of interest rates and inflation.

The market saw its third-straight losing week for the Dow Jones Industrial Average and the second consecutive week in the red for the S&P 500. However, the Nasdaq Composite was an outlier, registering a weekly gain of 0.6%. Investors remained cautious about the direction of interest rates in the United States but hopeful that recovery elsewhere would support trade. Traders are still worried about US inflation and the potential for rates to linger for longer. According to Susannah Streeter, head of money and markets at Hargreaves Lansdown, the sentiment has been supporting the dollar.

The Federal Reserve meeting minutes set to be released this week will provide clues about the next rate increase in March, which some investors are now expecting to be 50 basis points due to strong economic data and hotter-than-projected inflation readings. Fed President Loretta Mester has previously stated that she would have favored raising interest rates by 50 basis points on February 1st rather than the smaller quarter-point rate increase that her colleagues opted for. Traders worried about inflation and the future path for interest rates are waiting for the release of the Personal Consumption Expenditures (PCE) price index, which is the Fed’s most closely watched assessment of how quickly prices are rising across the economy. The index is set to be released on Friday morning.

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