Stock Futures Flat as Investors Await Key Fed Policy Decision: Honest Opinion

The stock market seems to have hit a wall lately, with investors awaiting key Fed policy decisions. This situation became increasingly evident on Wednesday as stock futures remained flat ahead of the announcement from the Fed.

Europe Stocks Slight Gains at the Open

While the European STOXX 600 index opened flat on Wednesday, it eventually managed to nudge 0.15% higher. The financial services sector was up 0.5% in early trade, while retail stocks led gains, up 1.1%. Telecom stocks had the biggest fall, down 0.64%. However, the UK’s FTSE 100, Germany’s DAX, and France’s CAC 40 were all red at 8:15 a.m. in London.

Nike Beats on Earnings, But Inventory Glut Pressures Margins

Nike’s shares dipped slightly in the pre-market after the company reported a quarterly decline in gross margin, overshadowing better-than-expected earnings and revenue. Earnings per share came in at 79 cents, well above a consensus forecast of 55 cents. In addition, revenue came in at $12.39 billion, while analysts expected $11.47 billion. However, the apparel giant’s gross margin fell 3.3 percentage points to 43.3% during its fiscal third quarter amid markdowns and promotions used to liquidate inventory.

GameStop Surges After Q4 Earnings Are Released

GameStop has been in the news lately, thanks to its Reddit-inspired rally earlier this year. However, the video game retailer’s fourth-quarter numbers look promising, with shares soaring 43%. The company earned an adjusted 16 cents per share after losing 47 cents per share in the year-earlier period. Revenue of $2.23 billion beat a StreetAccount estimate of $2.18 billion, and GameStop’s gross margins also grew to 22.4% during the quarter from 16.8% a year prior.

UK Inflation Comes in Hotter Than Forecast

Official figures showed that UK annual inflation increased from 10.1% in January to 10.4% in February. Economists in a Refinitiv poll expected a 9.9% increase. Core inflation, which excludes energy, food, alcohol, and tobacco, rose from 5.8% to 6.6%, while monthly inflation was up from 0.7% to 1%. The primary driver of year-on-year inflation was housing and household services, chiefly electricity and gas bills, the Office for National Statistics said. The monthly change was fueled by restaurants and cafes, food, and clothing, though partly offset by declines in recreational and cultural goods and services, as well as motor fuels, the ONS added.

Related Facts

• The Fed’s policy announcement continues to be a key event for investors, with markets hoping for guidance on how the central bank plans to unwind its pandemic-era support measures.
• The coronavirus pandemic continues to weigh heavily on the global economy, and central banks are under pressure to maintain monetary support until the situation improves.
• Inflation is a growing concern as prices for goods and services continue to rise amid supply chain disruptions and other pandemic-related challenges.

Key Takeaway

The stock market remains cautious as investors await key decisions from central banks worldwide. This is particularly true of the Fed, which is expected to unveil its plan for unwinding its pandemic-era support measures soon. Meanwhile, companies like Nike and GameStop continue to be in the news, with mixed results on the earnings front. In the UK, inflation remains a concern as prices for goods and services continue to rise, particularly in the housing and household services sector.

Conclusion

The global economy continues to be in flux as the coronavirus pandemic persists. As a result, investors are closely monitoring central banks for signs of how they will manage interest rates and monetary policy in the future. As a result, the stock market is likely to remain cautious until there is greater clarity on this front. Meanwhile, companies will continue to release earnings reports that investors will watch closely for signs of recovery.