U.S. stock index futures edged lower during morning trading Wednesday, after registering gains the previous day amid signs of tensions easing between Russia and Ukraine.
Futures contracts tied to the Dow Jones Industrial Average slipped 82 points, or 0.24%. S&P 500 futures also fell about 0.2% and Nasdaq 100 futures were down 0.17%.
Markets have been driven largely by concerns over the Russia-Ukraine conflict, and the prospect that the Federal Reserve is about to embark on a rate-hiking campaign to tamp down inflation.
In the most recent developments, NATO officials accused Russia of massing troops at the Ukrainian border, a day after Moscow said it was pulling back.
President Joe Biden addressed the latest developments between Russia and Ukraine Tuesday afternoon, reiterating that the U.S. will defend NATO territory.
“If Russia proceeds, we will rally the world,” he said, adding that Washington’s allies were ready to impose powerful sanctions that will “undermine Russia’s ability to compete economically and strategically.”
The comments came after the Russian government said earlier in the day that some troops who had been on the Ukrainian border had returned to their bases.
This helped boost sentiment on Wall Street. The yield on the benchmark 10-year Treasury topped 2% as a risk-on tone returned to the market.
The major averages advanced Tuesday, snapping a three-day losing streak. The Dow gained 422 points, or 1.2%. The S&P added 1.58%, while the Nasdaq Composite rose 2.5%.
Technology was the top-performing S&P 500 sector, with nine out of the 11 groups registering gains on the day. Utilities and energy stocks were the two sectors in the red, dipping 0.6% and 1.4%, respectively.
“U.S. stocks rallied on optimism that it doesn’t seem like Russia will invade Ukraine this week and despite another hot PPI report, as many on Wall Street are still not convinced the Fed will be as aggressive as some are calling for this year,” said Oanda’s Ed Moya.
The Labor Department said Tuesday that wholesale prices jumped 1% in January, bringing the gain over the past 12 months to 9.7% on an unadjusted basis.
As inflation runs hot, Wall Street is looking ahead to the minutes from the Federal Reserve’s January meeting, which will be released Wednesday at 2 p.m. ET.
The summary could be viewed as stale considering the meeting happened before the most recent data, which pushed market pricing into anticipating rate hikes this year totaling 1.75 percentage points, or the equivalent of seven 0.25 percentage point increases. Traders also are indicating the Fed could institute a 50 basis point move at the March meeting. A basis point is 0.01 percentage points.
“The latest inflation data continue to decimate the ‘inflation is purely transitory’ theory,'” said Michael Cembalest, chairman of market and investment strategy at J.P. Morgan Asset Management. “After pricing in less than one Fed hike as of last September, markets and Fed watchers now expect between 6 and 7 hikes over the next year, with some arguing for a 50 basis point move and not just 25.”
Retail sales data will also be released Wednesday at 8:30 a.m. on Wall Street. Economists are expecting the report to show that sales rose 2.1% in January. That compares to a 1.9% decline in December.
Earnings season continues on Wednesday, with a number of companies slated to provide quarterly updates, including Applied Materials, Hyatt, AMC, Nvidia and Cisco Systems.
