Stock futures were little changed Tuesday, as traders took a breather after fears of even higher rates sparked a sell-off during the previous session.
Futures tied to the Dow Jones Industrial Average traded 20 points higher, or 0.06%. S&P 500 and Nasdaq-100 futures rose marginally higher.
The Nasdaq Composite led Monday’s downward charge, dropping 1.93% for its biggest one-day drop since Nov. 9. The S&P 500 shed 1.79%, also notching its worst day in nearly a month. The Dow, meanwhile, lost 482 points, or 1.4%.
Better-than-expected November ISM Services data, which looks at the purchasing level of manufacturers as a gauge the health of the broader economy, pressured equities Monday. The report stoked fears that the Federal Reserve will need to hike rates for longer than anticipated to bring down inflation. The release aligns with the payrolls report late last week in pointing to resilience within some areas of the economy.
Wall Street is largely expecting a 50 basis point increase to interest rates at the Fed’s December meeting, but remain conflicted over how long the central bank’s interest rate hiking campaign will need to last, especially given the latest data.
Despite this backdrop, markets could still move higher in the months ahead, even though slowing growth and higher rates will persist even into the new year, wrote Jason Draho, UBS’ head of asset allocation, in a note to clients.
“A year-end rally may still be in the offing, though investors are likely to remain skittish until November CPI is released on the 13th and the FOMC meeting concludes on the 14th,” he said. “If there are no surprises with these events, momentum could continue.”
Investors will look ahead to data Tuesday morning on international trade for insight into the strength of the U.S. and global economy. Later in the day, they will watch for post-bell earnings reports from Smith & Wesson and Stitch Fix.

Stock futures rose Tuesday as Wall Street braced for November’s key inflation report and the beginning of the Federal Reserve December policy meeting.
Futures tied to the Dow Jones Industrial Average gained 197 points, or 0.57%. S&P 500 and Nasdaq-100 futures added 0.53% and 0.55%, respectively.
Investors are looking ahead to the release of November’s consumer price index report, and hoping for signs of easing inflation. Economists surveyed by Dow Jones expect a 0.3% increase on a monthly basis or an annual pace of 7.3%. That would be a step down from October’s 0.4% monthly increase and annual gain of 7.7%.
Tuesday’s inflation report could play a key role in the Federal Reserve’s next rate-hiking decision expected at the conclusion of its two-day policy meeting on Wednesday.
Traders are largely pricing in a 50 basis point increase, a slight decline from the previous four hikes. They will also monitor updated economic projections and commentary out of Chair Jerome Powell’s press conference for signs of a potential policy pivot as fears of a recession linger on Wall Street.
Monday’s overnight moves follow a solid session for all the major averages after a tough down week. The Dow gained more than 528 points, or 1.58%, while the S&P and Nasdaq rose 1.43% and 1.26%, respectively.
All S&P 500 sectors finished with gains, led to the upside by energy stocks, which rose as oil prices gained.
“I think this is a reflection of what’s anticipated out of the CPI number tomorrow, and a hope that the Fed will confirm a 50 basis point raise on Wednesday,” said Kevin Philip, partner at Bel Air Investment Advisors.
“I think the market, as it’s done before, is banking, in my opinion, a little too heavily on some sort of Fed pivot and this bounce we got today is fragile at best.”

U.S. stock futures were fractionally higher early Monday ahead of a week with several anticipated events in the ongoing fight against inflation.
Futures for the Dow Jones Industrial Average added 50 points, or 0.15%. Those for the S&P 500 and Nasdaq 100 edged 0.2% and 0.26% higher, respectively.
The move in futures comes as investors will be focused on inflation this week. On Tuesday, the November consumer price index will be released, and traders will be looking for a sign that inflation is slowing.
The Federal Reserve has a two-day meeting starting the same day. The central bank is expected to announce another rate hike on Wednesday, though traders are anticipating a smaller move than in recent months.
In addition to the expected rate hike, the Fed’s updated economic projections and Chair Jerome Powell’s press conference could be key signals for what the central bank wants to do in the coming months.
“Financial conditions have eased dramatically since the October CPI reading released last month, so the Fed will likely use the December FOMC meeting to walk those back,” said Cliff Hodge, chief investment officer for Cornerstone Wealth. “We think the markets are too sanguine on rates after the first quarter and we expect Powell to take a more hawkish tone and for the dots to indicate higher rates for a longer period of time than what is currently being priced in by the futures markets.”
Wall Street is coming off a rocky week that saw all three major averages lose ground. The Dow fell 2.77% for its worst week since September. The S&P 500 dropped 3.37%, while the Nasdaq Composite shed 3.99%.

Stock futures slid Wednesday, with traders fretting over the possibility of a recession as the Federal Reserve could raise rates for longer than expected.
Futures tied to the Dow Jones Industrial Average were down 142 points, or 0.4%, while S&P 500 futures lost 0.6% and Nasdaq 100 futures traded lower by 1.1%.
Wall Street is coming off another tough session, with the Dow falling more than 350 points, or 1.03%. The S&P 500 and Nasdaq Composite lost 1.4% and 2%, respectively.
Investors have been losing hope that the Fed will be able to engineer a so-called soft landing that successfully tamps down inflation through higher rates and also avoids a recession. Instead, concerns are swirling around the state of the economy and the likelihood of a downturn in 2023.
“All told, financial indicators point to a recession on the horizon,” wrote Wells Fargo’s Azhar Iqbal in a note to clients Wednesday. “The S&P 500 has peaked ahead of recessions with an average lead time of four months over the past few business cycles. Taken together with the inverted yield curve, markets are clearly braced for a recession in 2023.”
Investors await more economic data this week for clues on what to expect from the Fed. Mortgage loan application data showed a decline last week despite a fall in rates.
The tail end of earnings season continued with a solid report from Campbell Soup.

U.S. stock futures inched cautiously higher on Friday ahead of a shortened trading session.
Futures on the Dow Jones Industrial Average rose 40 points, or 0.12%. S&P 500 futures added 0.07% and Nasdaq 100 futures slipped 0.17%, weighed down by shares of Activision Blizzard, which fell in premarket trading on news that the FTC could block Microsoft from taking over the gaming company.
Wall Street looks set to close out an upbeat holiday-shortened week, after the Federal Reserve’s latest meeting minutes added to expectations that monetary policy tightening may slow down.
Minutes from the Fed’s November meeting signaled that the central bank is seeing progress in its fight against high inflation and is looking to slow the pace of rate hikes.
“A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,” the minutes stated.
Stocks jumped on the news Wednesday, notching the second consecutive day of gains in a week marked by choppy trading and low volumes.
Markets were closed on Thursday for the Thanksgiving holiday and will close at 1 p.m. ET on Friday.

S&P 500 futures were flat on Wednesday as Wall Street awaits an afternoon speech on the economy from Federal Reserve Chair Jerome Powell.
S&P 500 futures were essentially little changed, with the benchmark looking to snap a 3-day losing streak. Futures tied to the Dow Jones Industrial Average lost 18 points. Nasdaq 100 futures climbed 0.1%.
Traders were hit with two reports Wednesday morning that caused volatility in stock futures. On one hand, a labor report signaled the job market could be cooling, raising hopes the Federal Reserve would slow its aggressive rate-hiking campaign. On the other hand, an updated reading of third-quarter gross domestic product was released and it showed the economy was stronger last period than first realized.
Payroll processing firm ADP said Wednesday that private companies added just 127,000 positions for the month, well below the 190,000 consensus estimate from economists polled by Dow Jones.
But the Bureau of Economic Analysis also said Wednesday that third-quarter GDP increased at a 2.9% annual rate, according to its second estimate. That was revised higher from the 2.6% first estimate.
Powell will give a speech at the Brookings Institution this afternoon that may give further insight into the central bank’s thinking on future interest rate increases. The Fed is slated to meet later this month and is largely expected to deliver a smaller 0.5 percentage point rate hike after four consecutive 0.75 percentage point increases to tame high inflation. Any signal of a pivot on future rate hikes would likely send markets higher.
“This is a Fed-made recession, so eventually when he does pivot, the market should move higher pretty quickly,” said Steve Grasso, CEO of Grasso Global, on CNBC’s “Fast Money” Tuesday.
Wall Street is coming off a mixed session. The Nasdaq Composite shed 0.59% and the S&P 500 lost 0.16%, marking the third straight negative day for each. The Dow Jones Industrial Average notched a marginal gain, closing 3.07 points, or 0.01%, higher.
Stocks have been weighed down by China’s zero-Covid policy and have failed to fully recover from losses even as the country announced steps toward reopening, such as an uptick in vaccination rates for the elderly.

Stock futures were little changed Wednesday as investors awaited the Federal Reserve’s latest interest rate hike decision in its effort to crush inflation.
Dow Jones Industrial Average futures dipped 2 points, or less than 0.1%. Futures tied to the S&P 500 and Nasdaq 100 were also roughly flat.
The Fed will conclude its December meeting and is expected to deliver a 50 basis-point rate hike. That’s a smaller bump after four consecutive 75 basis point hikes. A basis point is equal to one hundredth of one percent.
Chair Jerome Powell will also speak Wednesday, giving further clues about what’s coming from the Fed in 2023. In previous meetings this year, traders have been sensitive to Powell’s language, interpreting his tone as hawkish or dovish.
“While we expect the Fed to slow the pace of rate rises at its Wednesday meeting, policymakers are likely to stress that the job of curbing inflation is not yet over,” UBS’ Mark Haefele wrote in a Wednesday note. “A slowing of job creation and wage growth will be needed before the Fed can stop hiking.”
Stocks rose for a second day Tuesday, fueled by a cooler-than-anticipated inflation report. The November consumer price index was 7.1% on the year, less than the 7.3% gain expected by economists surveyed by Dow Jones. The 0.1% increase from the previous month was also less than forecast.
The signal that inflation may have peaked was positive for stocks as it means the Fed may be one step closer to halting interest rate hikes or switching to cuts, which would fuel equities.