Dow Futures Steady as Fed Signals Need to Keep Raising Interest Rates

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Stock futures fluctuated Thursday after Federal Reserve officials agreed they need to keep raising interest rates to cool inflation, but indicated the pace of those hikes could slow if economic data supported such a move.

Contracts linked to the Dow Jones Industrial Average rose 3 points, or 0.01%, to 33,966, S&P 500 futures were up 0.02% and Nasdaq futures declined 0.02%.

Stocks fell for the first time in four sessions on Wednesday following the release of the minutes from the Fed’s July 26-27 meeting, at which the central bank boosted the fed-funds rate target by three-quarters of a percentage point for the second straight month.

The minutes also revealed the Fed was worried that if rates were tightened too much it would hurt the economy. But for now, with central bankers concerned inflation could become entrenched and with a “very tight” labor market, rates will have to be moved beyond neutral and into “restrictive” territory.

“Some participants indicated that, once the policy rate had reached a sufficiently restrictive level, it likely would be appropriate to maintain that level for some time to ensure that inflation was firmly on a path back to 2%,” according to the minutes, which were released Wednesday.

“It’s a no-brainer to expect rate hikes to continue near-term,” said Bill Adams, chief economist at

Comerica

Bank.

Comerica forecasts the Fed will raise rates by half a percentage point at its next meeting in September, but “it’s a close call between that and another hike of three quarters of a percent,” Adams said.

CME FedWatch indicates that 59.5% of investors anticipate the Fed will boost rates by 50 basis points in September and 40.5% expect a hike of 75 basis points.

The yield on the 10-year Treasury dipped Thursday to 2.889%, while U.S. oil prices rose 1% to $89.03 a barrel.

Data on weekly jobless claims and existing-homes sales for July will be released Thursday, with earnings reports from

Estee Lauder

(ticker: EL) and

Kohl’s

(KSS) scheduled for before the opening bell, and

Applied Materials

(AMAT) after markets close.

These stocks were making moves on Thursday:

Bed Bath & Beyond

 (BBBY) was falling 12.4% after GameStop chairman and activist investor Ryan Cohen signaled in a regulatory filing his intent to sell a stake in the home-goods retailer that is owned by his firm RC Ventures.

Cisco Systems

(CSCO) was rising 4.7% after the networking and security products company reported strong fiscal fourth-quarter earnings and provided an upbeat revenue forecast for the October quarter.

Wolfspeed

(WOLF) rose 21.8% after reporting a narrower fiscal fourth-quarter loss and issuing an upbeat first-quarter outlook.

Bath & Body Works

(BBWI) fell slightly after it issued a third-quarter earnings forecast that was well below analysts’ forecasts. The company also said it would eliminate about 130 roles, mostly leadership positions.

Write to Joe Woelfel at [email protected]