Stock Futures Little Changed as Rate-Hike Speculation Continues
New York (Aug31) Stock futures hovered just below the flatline on Wednesday morning as Federal Reserve talk continued to spark speculation over a near-term rate hike.
S&P 500 futures were down 0.04%, Dow Jones Industrial Average futures decreased 0.05%, and Nasdaq futures declined 0.03%.
Slower U.S. economic growth will likely continue, leading to a prolonged period of low interest rates for the foreseeable futures, Chicago Federal Reserve Bank President Charles Evans said in comments to the Shanghai Advanced Institute of Finance in Beijing. Evans also noted that low expectations among investors has become entrenched, allowing the Fed to delay a hike without financial instability.
"Long-run expectations for policy rates provide an anchor to long-run interest rates," Evans said in his prepared remarks. "So, lower policy rate expectations act as a restraint on how much long-term rates could rise following a surprise over the near-term policy path."
Evans' comments add to the differing views over the Fed's likely rate-hike timeline. Fed Vice Chairman Stanley Fischer added to the discussion on Tuesday, noting that the U.S. labor market is "very close to full employment" and that the next interest rate increase might not be "one and done."
Wall Street currently expects a more than 30% chance that the Fed will raise rates at its Sept. 20-21 meeting. The chances of a September hike were less than 20% before hawkish comments from Fed Chair Janet Yellen on Friday. The U.S. economy has improved in recent months to the point where near-crises levels of rates aren't justified, Yellen said in her widely anticipated speech at the Economic Policy Symposium in Jackson Hole, Wyo. on last week.