U.S. stock index futures were modestly lower during overnight trading Wednesday, after the major averages finished the day higher despite escalating tensions between Russia and Ukraine.
Futures contracts tied to the Dow Jones Industrial Average declined 28 points. S&P 500 futures shed 0.11%, while Nasdaq 100 futures dipped 0.2%.
During regular trading on Wednesday the Dow advanced nearly 600 points, or 1.79%, snapping a two-day losing streak. The S&P 500 gained 1.86%, while the Nasdaq Composite added 1.62%. It was the tech-heavy index’s fourth positive session in the last five.
Wednesday’s rally was broad based, with all eleven S&P 500 sectors advancing. Visa was the sole Dow component to decline, with the other 29 stocks in the benchmark index finishing the day in the green. Caterpillar was the top gainer, rising more than 5%.
Markets have been volatile in recent sessions as investors assess risks to the U.S. economy fueled by Russia’s war in Ukraine.
“The situation is very fluid on the ground in Ukraine. …We don’t know where the ultimate bottom in the market may be, but we continue to believe the U.S. economy will have above-average growth this year,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute.
Despite Wednesday’s advance all three major averages are down more than 4% over the last month, with the Nasdaq Composite still in correction territory. Ed Moya, senior market analyst at Oanda, said that volatility is likely here to stay.
“Risk appetite will struggle to fully return until a true end in the war in Ukraine is in sight,” he said. “Wall Street wants to take a break from the defensive playbook and hold off overloading on utilities, healthcare and consumer staples stocks,” Moya added.
Wednesday’s broad market strength came despite the continued jump in oil prices, which is contributing to inflation fears across the economy. West Texas Intermediate crude futures, the U.S. oil benchmark, topped $112 per barrel during Wednesday session, a price last seen in May 2011.
Amid rampant inflation Federal Reserve Chairman Jerome Powell said that he remains committed to easing cost pressures through rate hikes, despite the uncertainty unfolding in Ukraine.
“We’re going to avoid adding uncertainty to what is already an extraordinarily challenging and uncertain moment,” he said under questioning from House Financial Services Committee members.
“To the extent that inflation comes in higher or is more persistently high than that, we would be prepared to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings,” he added. Powell will testify again tomorrow before the Senate Banking Committee.
The yield on the benchmark U.S. 10-year Treasury advanced Wednesday to about 1.9%, after dipping below 1.7% during the prior session.
A strong private payrolls report on Wednesday also boosted sentiment on Wall Street. On Thursday weekly jobless claims will be posted, with economists calling for a print of 225,000, according to estimates from Dow Jones.
The reading comes ahead of February’s highly-anticipated jobs report, which will be released Friday. Economists are expecting 440,000 jobs to have been added during the month. January’s report showed an increase of 467,000.
Services PMI and ISM Services readings will also be released Thursday morning.
On the earnings front several retailers are set to post results ahead of the opening bell, including Big Lots, BJ’s Wholesale, Burlington Stores and Kroger. Broadcom, Costco and Gap are on deck for after the market closes.