Traders work on the floor of the New York Stock Exchange during morning trading on August 31, 2023 in New York City.
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Stock futures were lower early Thursday as renewed concern swirled on Wall Street over the course of the Federal Reserve’s interest rate policy, and whether policymakers will enact another hike this year.
Technology stocks were the biggest underperformer during regular trading hours, with the Nasdaq Composite closing 1.1% lower and notching a third-consecutive losing session. The tech-heavy index was dragged lower by a more than 3% decline in both Apple and Nvidia.
Higher Treasury yields added pressure to tech stocks and added to investor worry that the Federal Reserve will use recent stronger-than-expected economic data to justify pushing benchmark lending rates higher to squelch inflation. The yield on the 2-year Treasury note added as much as 6 basis points Wednesday.
The Institute for Supply Management’s U.S. services index climbed to a six-month high in August, while the price segment ticked up to 58.9%, a report Wednesday showed. The ISM index’s price barometer hit a four-month high.
“Given the data, the Fed will most likely deliver a hawkish pause at the next meeting,” said by Jeffrey Roach, chief economist at LPL Financial. “The hard data is not yet convincing enough to establish strong views about the subsequent meetings. Investors should still find opportunities in the market but it could be a bumpy ride.”
While 93% of interest rate traders foresee no change at September’s Federal Open Market Committee meeting, expectations of an additional interest rate hike at the November meeting rose above 40%, according to the CME FedWatch tool.
Traders also pored through the latest corporate earnings after the Wednesday closing bell. Shares of C3.ai slipped 5.3% after reporting lower-than-expected gross margin in its fiscal first quarter. GameStop added more than 6% after reporting second-quarter results, while ChargePoint Holdings fell more than 10% after missing revenue estimates.