US market futures declined on Wednesday, indicating that the challenging January may not end as investors’ hopes for interest rate reductions were dashed and concerns over China’s economy intensified.
Futures for the Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) both dropped 0.4%, extending Tuesday’s negative start to the week that was curtailed by the holiday. The tech-heavy Nasdaq 100 (^NDX) saw a 0.5% decline in futures.
As policymakers resist the ongoing wager that central banks would slash rates frequently and early in 2024, stocks have suffered. On Wednesday, Christine Lagarde, the head of the European Central Bank, echoed the warnings of Federal Reserve Governor Chris Waller and others that expectations of an impending relaxation are too high.
Disappointing GDP figures that revealed China’s economy is slowing down in spite of stimulus programmes was another setback. Fears of a decline in demand from the second-largest economy in the world caused oil prices to drop.
With the season expected to pick up speed and the release of the December retail sales data later on Wednesday, hopes now centre on quarterly results. Fed representatives have made a point of emphasising that new economic data will inform their policy decisions.
The morning’s focus is on regional bank fourth quarter results, following the mixed response of Wall Street’s major lenders’ profits. Expected to report are U.S. Bancorp (USB) and Citizens Financial (CFG).