US stocks traded flat in pre- market trading after Powell’s dovish testimony on the Fed’s monetary policy. S&P 500 index futures were mixed ahead of US crude oil inventories and new home sales data. Dow Jones index futures as well as Nasdaq futures were on a standstill.
S&P 500 Economic Concerns
The S&P 500 index is set to open markets lower than expected. Fed chair, Jerome Powell, announced on Tuesday that the inflation pressures are stronger than expected. However, he reiterated that the pressures could be transitory.
Powell attributed the surge in inflation to various factors such as airline tickets and hotel prices. He also mentioned lumber along with the rising consumer demand. This factors gained and boosted the economy after the easing of lockdown restrictions in the country.
Inflation prices have also been boosted by high demand for labor, goods, and services. With the reopening of global economies, inflation is expected to increase at a faster rate. However, Powell offset Bullard’s statement on interest rate hikes as early as 2022.
The S&P 500 index will react to the MBA 30-year Mortgage Rate. The mortgage rates as well as the demand for refinances increased last week. Demand for refinances jumped 3% from the previous week’s figures. However, the volume was 9% lower than last year’s.
The average contract interest rate for the 30-year mortgage rate hit its highest level in a month. The rate increased to 3.18% from 3.11%. The increase in rates was boosted by the Fed’s announcement last week that they would taper its monetary policy earlier than expected.
Xpeng recorded the most gains in pre-market trading. The vehicle manufacturer gained 4.15% in its stock prices. The company has been reporting gains ever since it was listed in the United States with a market value of more than $30 billion.
GlaxoSmithKline’s stock gained more than 3.94% in the pre-market trade. This was after the company announced its plan to draw out its consumer health care business into a separate company. GlaxoSmithKline will receive $11 billion from its new company.
Shake Shack gained 1.71% in pre-market trading. The restaurant company announced the extension of its footprint in China. The company plans to increase its locations in China from 16 to 79 by 2031.