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Stock futures mixed as Fed likely to raise interest rates, Mortgage rates could be affected by Fed rate hike, Gold demand surges to 11-year high, Cramer calls bull market and says buy on the dip.
Stock futures were mixed on Wednesday as investors awaited an anticipated rate hike from the Federal Reserve.
As of 8:30 AM ET, Futures for the Dow Jones industrial average were down 133 points or -0.39%, while S&P 500 futures were down 10.75 points or -0.26%, and NASDAQ futures were down 13.5 points or -0.11%.
However, despite a weak start, stocks rallied on Tuesday, with the S&P 500 having its best January since 2019 and the NASDAQ doing likewise with its strongest January since 2001, climbing by over 10%, Yahoo Finance reported.
The benchmark 10-year U.S. Treasury was down -0.059 for a yield of 3.47%, while the 2-Year Treasury was down -0.024 for a yield of 4.183%.
In oil futures, WTI crude was up +0.56% and trading at $79.43 a barrel, while Brent crude was up +0.41% and trading at $85.81 per barrel.
The Federal Reserve is expected to slow its pattern of aggressive interest rate hikes, raising rates by only a quarter point on Wednesday, its smallest increment since it began hiking the federal rate last March. Analysts and market pros expect federal reserve Chairman Jerome Powell to sound hawkish, meaning he will lean toward tighter policy and keeping interest rates high, according to CNBC. The Fed will release its rate decision on Wednesday at 2 PM ET, then Powell will brief the media at 2:30 PM.
mortgage rates have been fairly close to 4-month lows seen two weeks ago, with average lenders offering conventional 30-year fixed rates in the low six-percent range, Mortgage News Daily reported. As rates have dropped in recent weeks, it has sparked an increase in mortgage demand. However, if mortgage rates increase as a result of a federal rate hike, lenders worry it could soften demand.
Fixed-rate mortgages are tied to the 10-year treasury rate, according to Bankrate. However, though the Federal Reserve doesn’t set mortgage rates, its actions indirectly affect them, according to NerdWallet.
Gold demand surged to an 11-year high in 2022, increasing 18 percent, the largest annual figure since 2011, as demand soared in the fourth quarter, driven by “colossal” purchases by central banks, CNBC reported. It also marks a 152% increase from 2021. The World Gold Council attributed geopolitical uncertainty and high inflation as the key factors driving the demand.
Jim Cramer, host of CNBC’s Mad Money, told investors on Tuesday the market is in a bull mode and the declines represent opportunities to buy on a dip. Cramer’s advice comes as stocks rose on Tuesday, with the S&P 500 experiencing its best January performance since 2019 on strong corporate earnings amid softer-than-expected inflation data, CNBC reported.
“We have to prepare for the down days now because in a bull market, they’re buying opportunities,” Cramer said. “Even if it doesn’t reverse today, well then, there’s always tomorrow, so don’t think of betting against it.”
