Scott Mlyn | CNBC
Futures contracts tied to the major U.S. stock indexes slipped during the overnight session Wednesday evening as Wall Street turned its attention to an upcoming address from Federal Reserve Chairman Jerome Powell.
Dow futures lost 23 points, pointing to a muted move when regular equity trading resumes Thursday morning. Both S&P 500 and Nasdaq-100 futures ticked lower, each pointing to flat opens.
Thursday’s trading is likely to be driven in large part by comments from Fed Chair Jerome Powell, who is expected at 9:10 a.m. ET to introduce a new pandemic-era tool to combat the economic impact of Covid-19 and foster inflation in the U.S. The Fed’s annual symposium will be held virtually this year instead of the usual locale of Jackson Hole, Wyoming.
The central bank has for years tried to keep inflation at 2%, a rate of price increase that policymakers consider both manageable and indicative of a healthy economy. But ever since the financial crisis, inflation in the U.S. has more often than not lagged the Fed’s target.
Powell is expected to acknowledge that ongoing inflation shortfall and announce that the Fed will now have an “average inflation” target. Investors say that the move will allow the Fed to be more comfortable with inflation creeping above the 2% threshold so long as it’s eventually offset by periods of below-average price growth.
Rick Rieder, BlackRock’s global chief investment officer of fixed income, told CNBC that “the rates markets are anticipating the Fed is going to be dovish and willing to withstand inflation being higher for a longer period.”
The prospect of continued stimulative policy could help push the major market indexes to new record highs, a feat both the Nasdaq Composite and S&P 500 clinched on Wednesday.
A tech-led rally led the S&P 500 up 1% to 3,478.73 on Wednesday while the Nasdaq popped 1.7% to finish the day at 11,665.06.
Some of the nation’s largest technology and consumer communications companies were responsible for the upward pressure on Wednesday, with blowout earnings from Salesforce sending its stock up 26%. Facebook and Netflix jumped 8.2% and 11.6%, respectively, while Apple added 1.4%, Amazon advanced 2.8% and Microsoft climbed 2.1%.
Wednesday’s gains put the S&P 500 up more than 58% since hitting an intraday low on March 23. The Nasdaq has soared by 75% in that time period.
Investors will also pore through the government’s latest report on jobless claims on Thursday. The Labor Department at 8:30 a.m. ET will release figures on how many Americans filed for unemployment benefits for the first time during the week ended August 22.
Economists polled by Dow Jones expect some 1 million workers filed initial claims last week. That would be a deceleration from the prior week’s print of 1.1 million first-time claims.
— CNBC’s Patti Domm contributed to this report.