Equity futures flat and Fed to start September meeting on Tuesday

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The Fed remains hawkish, says Trivariate's Adam Parker

Equity futures were flat on Tuesday morning as Wall Street appeared to be building on a modest recovery ahead of another Federal Reserve rate hike.

Futures linked to the Dow Jones Industrial Average were slightly lower. S&P 500 futures fell 0.05% and those for the Nasdaq 100 also fell 0.03%.

The Federal Open Markets Committee begins its September meeting on Tuesday and central bankers are expected to announce a 0.75 percentage point rate hike on Wednesday. Shares have plunged in recent weeks as comments from Fed Chair Jerome Powell and an unexpectedly warm consumer price index report in August caused traders to prepare for even higher rates until inflation cools.

“I think a lot of work went into adjusting interest rate expectations last week,” said Angelo Koukafas, investment strategist at Edward Jones.

“Stock market momentum is downward. … Until we see that pattern of lower [inflation] measurements, it will be difficult to reverse that heightened uncertainty and volatility that we are seeing,” added Kourkafas.

During a choppy trading session on Monday, stocks rose in the afternoon to break a two-day losing streak and recover some of their recent losses. The Dow rose 197 points, or about 0.6%. The S&P 500 and Nasdaq Composite gained about 0.7% and 0.8% respectively.

However, after the market closed on Monday, Ford announced that supply chain problems would cost the automaker a lot of money additional $1 billion in the third quarter. Shares fell 4.5% in extended trading.

On the economic front, investors will get a fresh look at the housing market on Tuesday morning with the August reports for the start of housing construction and building permits.

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